Vertex 2024 Mid-Year Sales Tax Rates and Rules Report Reveals Local Governments are Increasingly Dependent on Sales Tax Revenues

Core Insights - The 2024 Mid-Year Sales Tax Rates and Rules report highlights a significant increase in local tax rate changes, with a 67% year-over-year rise in city-level sales tax adjustments [1][5] - The report indicates a growing complexity in tax compliance for businesses due to the proliferation of fees and the ongoing trend of cities leveraging sales taxes [2][4] Local Tax Trends - In the first half of 2024, there were 159 authorized sales tax rate changes at the city level, compared to 95 in the same period of 2023, marking a dramatic increase [5] - The establishment of new taxing cities (30) and district taxes (77) in early 2024 reflects a trend where local governments are more agile in implementing new taxes compared to state-level changes [5] - Local governments are raising sales tax rates significantly, with three times more county-level increases than decreases and twelve times more city increases than decreases [5] Fee Proliferation - The number of various fees implemented by states has surged from approximately 400 two years ago to around 1,400 today, indicating a growing trend in specialized fees [5] Global Tax Trends - Globally, while most nations are avoiding increases in VAT rates, there is an expected rise in environmental taxes, particularly carbon-related fees in the EU [7] - The global focus on digital VAT initiatives is complicating international operations for businesses [8] Implications for Tax Management - The increasing complexity in business structures and the rise of new fees necessitate a more agile and technologically advanced approach to tax management [8] - Indirect tax teams must update software systems, streamline invoicing processes, and navigate a complex compliance landscape across multiple jurisdictions [9]