INDIANAPOLIS - At least half the customers at Clarksville Schwinn Cyclery come from across the Ohio River in Kentucky, but owner Bob Peters is worried that might change starting Tuesday.
That's when Indiana's sales tax will increase from 6 percent to 7 percent, while it remains at 6 percent in Kentucky.
"It's not going to help," said Peters, who remembers business picking up in 1990 after Kentucky raised its rate to 6 percent while Indiana's was 5 percent. "Any time people can save money, they are out to save money, and there is just a bridge from Kentucky and Indiana."
Gov. Mitch Daniels and leading lawmakers sold the sales tax increase in the General Assembly as part of a property tax relief and restructuring plan that is projected to cut homeowners' bills by about 30 percent on average statewide.
The increase will bring in an estimated $620 million through the end of this year, and close to $1 billion a year after that - revenue that will be used to lower property taxes.
The tradeoff? Hoosiers will pay more for goods and dining out.
A $32 pair of jeans will cost $34.24 beginning Tuesday, a 32-cent increase over the current tax rate. A $276 bicycle will cost $295.32 with tax - $2.76 more than before. A $3,300 diamond ring will cost an extra $33.
Kristin Sims of Indianapolis, who was shopping downtown a week before the tax increase, thinks the higher tax will make it harder for stores to attract customers during this sluggish economy.
"But when you need to shop, you need to shop and buy things no matter what the tax is," Sims said.
Sims thinks she will save about $700 in property taxes if her bill is cut by a third. In her view, that's a good tradeoff.
Jim Wright of Greenwood agrees.
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