Californian collectors hit by tax rise

The rates for use tax and sales tax has increased to 7.5%

Californian collectors faced an increase in tax last month, making it more expensive to import works of art into the state. The California State Board of Equalization announced that the base rate for use tax and sales tax had increased by 0.25% from 7.25% to 7.5%. The sales tax is added to purchases made within the state (the equivalent of value-added tax in the UK). The use tax, meanwhile, requires taxpayers to declare purchases made from businesses outside the state (cities across the state add their own district taxes, on top of the base rate). The Los Angeles fine art photography dealer Michael Dawson says that while some dealers will choose to absorb the sales tax as part of their negotiations, others may send the work to another state, if the client has a valid address there. Meanwhile, one Berkeley-based collector says that many art owners are unaware of the use tax.

Appeared in The Art Newspaper Archive, 243 February 2013