States forced to raise sales taxes in struggle to balance the books

State or city sales taxes in America have always been maddening for foreigners. The unsuspected levies can add 10 per cent or more toquoted rates for meals, hotel or car rentals.

State or city sales taxes in America have always been maddening for foreigners. The unsuspected levies can add 10 per cent or more toquoted rates for meals, hotel or car rentals.

Now, because of massive national and local budget deficits, they are about to get worse. New Jersey introduced a 7 per cent tax on hotel rates this month,which in effect more than doubles the existing sales tax levied by the state of 6 per cent. Gamblers in Atlantic City will have to pay 4.25 per cent taxes on hotel rooms that used to be complimentary.

Alaska is imposing a 10 per cent tax on car rentals. Tighter security measures at airports have added $10 to tickets.Philadelphia and San Diego are considering higher hotel and meal taxes.

But the misery is not just for foreign visitors. Local inhabitants are facing higher state income and property taxes as states wrestle with a combined budget shortfall of $100bn.

Unlike the federal government, states must balance their budgets each year. A stagnant economy and extra education, healthcare and domestic security charges imposed by the White House have forced the states to raise money any way they can.