easy · GMAT Verbal

Identify the main conclusion: When a city increases its sales tax, consumers often choose to travel to neighboring municipalities to make large purchases. This shift in spending can lead to a net decrease in local tax revenue, despite the higher rate. Thus, raising sales taxes can be counterproductive for cities seeking to balance their budgets.

1. Shoppers often drive to nearby municipalities to escape a city's higher sales taxes.
2. A higher local tax rate can ultimately produce a net decrease in a city's tax revenue.
3. Neighboring municipalities reliably capture the bulk of the spending a tax-raising city loses.
4. Raising sales taxes can be counterproductive for cities seeking to balance their budgets.
5. Cities ought to lower their own sales taxes deliberately to lure shoppers away from their rivals.

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