Two weeks ago, we analyzed a proposed hike in the Oklahoma state sales tax, finding that the increase would give Oklahoma the highest sales taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. es in the country. While the Oklahoma statewide sales taxA sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding. currently sits at 4.5 percent, and the hike would bring the statewide rate to a modest 5.5 percent, local sales taxes are hefty in Oklahoma, adding an average of 4.28 percent on to the total sales tax consumers are likely to see on their receipts.
If the state sales tax hike were enacted, the combined average state and local sales tax rate would be 9.78 percent, with towns like Fort Gibson paying as high as 12 percent, and Tulsa paying 9.517 percent.
This matters for businesses and consumers in the state, and would affect Oklahoma’s competitiveness on the national stage. If enacted, the sales tax hike would hurt the state’s ranking on our State Business Tax Climate Index, dropping the state’s overall ranking from 33rd to 34th, and the sales tax component ranking from 38th to 44th.
Oklahoma’s Sales Tax Hike and the State Business Tax Climate Index
|
Current law |
Projected Ranking |
|
|
Overall |
33 |
34 |
|
Corporate |
8 |
8 |
|
Individual |
40 |
40 |
|
Sales |
38 |
44 |
|
Unemployment Insurance |
1 |
1 |
|
Property |
18 |
18 |
View the 2016 State Business Tax Climate Index (released today!) here.
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