The rate has climbed for the past four years, and the upward movement continued in 2004 despite a record number of tax-rate decreases. Much of the upward pressure on the tax rate can be attributed to budget difficulties that were pushed downward from the federal government. Election-year politics most likely contributed to the high number of tax decreases (160), but increases in other places pushed up the average.
The highest state sales tax rate is 7 percent, which is on the books in Mississippi, Rhode Island and Tennessee. The city with the combined highest rate is Arab, Alabama, where the total tax on sales is 12 percent.
