The sales tax is a percentage of total sales. If sales are say $10,000,000 in the state, the sales tax will be ($10,000,000)*(0.06) = $600,000. Lowering the tax to 5.5% is like giving consumers a discount on everything they buy. Hence lowering the sales tax may cause consumers to buy more, raising the total sales revenue to $11,000,000 for example. The sales tax on $11,000,000 at 5.5% is ($11,000,000)*(0.055) = $605,000 which is greater than the $600,000 raised when the sales tax was 6%.
