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Sales tax rises by 1% today across state

The cost of almost everything rises by 1% today.

Shoppers and retailers grumbled at the state sales tax increase, negotiated as part of a recent budget deal. But most shoppers said they wouldn't change their spending habits.

Sales tax in the city of Fresno and many other communities rises to 8.975% from 7.975%.

"How much more can you ask us to do?" asked Monica Friesen of Fresno at The Shops at River Park Tuesday.

Families are already cutting back and dealing with layoffs, she said. But like many, she said paying 1% more on many purchases wouldn't cause her to spend less.

"Gas goes up. Everything goes up. You don't like it, but you don't really have a choice," she said.

It's one more piece of bad economic news for shoppers, said Rick Doyle, general manager the Ethan Allen furniture store in the Villaggio shopping center in north Fresno.

"I think it's more of a psychological thing," he said. "One more thing people feel like they're having to place on their shoulders."

He hoped it wouldn't stop shoppers from buying, however. A 1% increase on a $6,000 leather sectional sofa is an additional $60, he noted.

Scott Handley of Fresno said it wouldn't change his buying habits.

"A penny won't make a difference," he said.

The increase is part of a budget deal reached last month to close a $42 billion deficit through June 2010.

The tax will stay at that higher rate until June 2011 or June 2012, depending on how residents vote on a proposal on the May 19 ballot.

While an extra penny on a $1 fly swatter isn't much, 1% has a bigger effect on large purchases, like cars.

The change spurred an uptick in business at some car dealerships in the days leading up to the increase as customers raced to make their purchases before today.

Pistoresi Chrysler Dodge Jeep in Madera was twice as busy as normal Tuesday as customers anticipated the sales tax increase, which coincided with the end of a sale by the manufacturer, said general sales manager Kevin Cavin.

The increase adds $240 to the cost of a $24,000 car, though some of that is tax deductible as part of the federal stimulus package.

Ruth Cox, a sales associate at Gary O. furniture in Clovis, said shoppers who can afford to buy furniture probably won't balk at the increase. The added tax on a $3,500 wall-mounted Murphy bed is $35, she noted.

"In the grand scheme of things, if I can't afford the extra $35, I probably can't afford the item," she said.

But when given a choice, local voters recently made their disdain for tax increases clear. Clovis residents overwhelmingly voted down a one-cent sales tax increase March 3. Measure A would have raised nearly $13 million a year to restore city services that have been cut over the past two years.

The tax increase comes at the worst possible time for many families, said National Retail Federation vice president of government affairs Craig Shearman. He noted that the NRF did not take a position on the issue.

"This is a time when consumers are stretched very thin, and they're trying to get as much mileage out of every dollar as possible," he said. "When you take another penny out of that dollar, it imposes that much more on working families."

It hits low-income families particularly hard, because they are more likely to spend money on necessities rather than optional purchases, he said.