Of the 1% sales tax increase, how much do county and city governments receive?

by Kirk Mason (mason@wsbt.com)

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Sales tax in Indiana went up to 7 percent on April 1, 2008. (WSBT photo)

By WSBT News1

Story Created: Jan 19, 2009 at 10:36 AM EST

Story Updated: Jan 19, 2009 at 12:49 PM EST

It's something you may notice on your bill at the grocery store or when you buy a car. Indiana recently raised the sales tax 1 percent, from 6 to 7 percent.

Kerry Lewis of Mishawaka has a Good Question: Of the 1 percent increase, how much do the county and city governments receive?

WSBT's Kirk Mason has the answer.

South Bend's Common Council voted to raise the local income tax, and St. Joseph County government talked about it before backing away, at least temporarily preventing the increase.

The reason some local leaders like South Bend Mayor Steve Luecke argue an income tax increase is needed, is because local governments are losing millions in property tax revenue.

When state government passed a property tax cap, possibly lowering what you pay in taxes on your home, they also raised the sales tax from 6 to 7 percent.

That was one way to make up for lost state revenue from property tax money, but Indiana's Office of Management and Budget says that 1 percent increase, like all sales tax money, goes to the state's general fund. So state politicians raised your taxes, and they get to control that money.

A place like St. Joseph County is a population center with lots of people spending money in South Bend, Mishawaka and Granger, but local governments don't see any of that sales tax money.

Indiana's higher sales tax went into effect April 1 of last year. At 7 percent, Indiana is now higher than Michigan's 6 percent, and one of the highest sales tax rates in the country.

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