On October 1, 2013, the District of Columbia sales and use 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. will drop from 6 percent to 5.75 percent. The tax cut brings the rate back to where it was before a recessionA recession is a significant and sustained decline in the economy. Typically, a recession lasts longer than six months, but recovery from a recession can take a few years. -induced tax increase in 2010. (The 10 percent meals tax, 18 percent parking tax, 12 percent tobacco tax, and 14.5 percent hotel tax will not change.)
What may surprise most people is that, with this change, Washington, D.C. will now have a lower 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. than both neighboring northern Virginia and Maryland (both 6 percent). This is only the second time in history that this has happened (1968 was the other, see table), and challenges the common conception of high-tax DC next to low-tax Virginia. While DC is cutting its sales tax, Maryland will retain a 2008 sales tax increase from 5 percent to 6 percent pushed through by Gov. Martin O'Malley (D), and Virginia Gov. Bob McDonnell (R) pushed through a transportation bill that boosted the combined state and local sales tax in northern Virginia to 6 percent, as of July 1, 2013.
Table: Sales Tax Rates in the District of Columbia, Virginia, and Maryland, 1965-present
|
Year |
D.C. sales tax |
Virginia sales tax rate (inc. local tax in Northern Virginia) |
Maryland sales tax rate |
|
1965 |
3% |
None |
3% |
|
1966 |
3% |
3% |
3% |
|
1967 |
3% |
3% |
3% |
|
1968 |
3% |
4% |
4% |
|
1969 |
4% |
4% |
4% |
|
1970 |
4% |
4% |
4% |
|
1971 |
4% |
4% |
4% |
|
1972 |
4% |
4% |
4% |
|
1973 |
5% |
4% |
4% |
|
1974 |
5% |
4% |
4% |
|
1975 |
5% |
4% |
4% |
|
1976 |
5% |
4% |
4% |
|
1977 |
5% |
4% |
5% |
|
1978 |
5% |
4% |
5% |
|
1979 |
5% |
4% |
5% |
|
1980 |
5% |
4% |
5% |
|
1981 |
6% |
4% |
5% |
|
1982 |
6% |
4% |
5% |
|
1983 |
6% |
4% |
5% |
|
1984 |
6% |
4% |
5% |
|
1985 |
6% |
4% |
5% |
|
1986 |
6% |
4.5% |
5% |
|
1987 |
6% |
4.5% |
5% |
|
1988 |
6% |
4.5% |
5% |
|
1989 |
6% |
4.5% |
5% |
|
1990 |
6% |
4.5% |
5% |
|
1991 |
6% |
4.5% |
5% |
|
1992 |
6% |
4.5% |
5% |
|
1993 |
6% |
4.5% |
5% |
|
1994 |
5.75% |
4.5% |
5% |
|
1995 |
5.75% |
4.5% |
5% |
|
1996 |
5.75% |
4.5% |
5% |
|
1997 |
5.75% |
4.5% |
5% |
|
1998 |
5.75% |
4.5% |
5% |
|
1999 |
5.75% |
4.5% |
5% |
|
2000 |
5.75% |
4.5% |
5% |
|
2001 |
5.75% |
4.5% |
5% |
|
2002 |
5.75% |
4.5% |
5% |
|
2003 |
5.75% |
4.5% |
5% |
|
2004 |
5.75% |
5% |
5% |
|
2005 |
5.75% |
5% |
5% |
|
2006 |
5.75% |
5% |
5% |
|
2007 |
5.75% |
5% |
5% |
|
2008 |
5.75% |
5% |
6% |
|
2009 |
5.75% |
5% |
6% |
|
2010 |
6% |
5% |
6% |
|
2011 |
6% |
5% |
6% |
|
2012 |
6% |
5% |
6% |
|
2013 (as of Oct. 1) |
5.75% |
6% |
6% |