D.C. Approves Tax Hikes
August 3, 2009
The District of Columbia Council has approved a 2010 budget designed to close their $666 million budget shortfall. Tax increases within the budget include:
- Raising the sales tax from 5.75 percent to 6 percent for three years. At 6 percent, D.C. would share the 13th highest sales tax rate rank among states.
- Raising the gasoline tax from 20 cents per gallon to 23.5 cents per gallon. D.C. would share Maryland’s gas tax rate-ranked at 26th highest among states.
- Raising cigarette taxes from $2 a pack to $2.50 a pack—a penny less than Massachusetts cigarette tax that ranks 6th highest among states.
(Tax rate rankings for all states can be seen in the Tax Foundation’s mid-year update of 2009 Facts & Figures: How Does Your State Compare? )
Combined reporting was approved as a way to force businesses to pay corporate income taxes on profits reported for subsidiaries not inside Washington. Also, indexing on homestead deductions for property taxes would be delayed until 2013.