CSAC Bulletin Article

Sales Tax Proposals Dominate Committee Agendas
Feedback Requested

March 16, 2017

Snack food, low-emission vehicles, diapers, video streaming, tampons, and text books all have one thing in common this year: sales tax proposals in the state Legislature. California’s Sales and Use Tax Law continues to receive much attention as policymakers grapple over what products should and should not be taxed. Thirty bills have been introduced this year on the topic and CSAC is actively lobbying to protect local revenues. Feedback is requested on the expansion of the sales tax as well.

CSAC has historically and consistently lobbied against sales and uses tax exemptions unless they are limited to only the state’s share of the tax and preserve the local portion so that vital dollars continue to flow to county-run services. The last thirty years of tax policy now directs roughly half the state sales-tax rate to counties, with nearly two-thirds of that share dedicated to local public safety and health programs.

Efforts to protect local revenue shares recently gained traction with Assembly Revenue and Taxation Committee Chair Sebastian Ridley-Thomas (Los Angeles) who temporarily held the “tampon tax” bill to seek possible amendments that would apply the tax exemption to only the state’s share.

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The Legislature is also considering proposals which would broaden the tax base and potentially increase the flow of money to local governments. Specifically, Assembly Member Garcia has introduced Assembly Bill 274 and Assembly Constitutional Amendment 2 to roll back the exemption on snack foods which was approved by voters back in 1992. This is estimated to generate $900 million per year in new revenue statewide. CSAC sees merit in this proposal and requests feedback from counties.

In other tax policy developments, Senate Bill 640, by Senator Hertzberg proposes the imposition of a “modest” sales tax on services to keep in line with the realities of California’s 21st century economy and consumer trends

In addition, Assembly Bill 479 (language not yet in print) would swap out the current sales tax on diapers for a liquor tax increase. CSAC will evaluate the measure once provisions are finalized for a possible position. Please contact Dorothy Johnson at djohnson@counties.org or Tracy Sullivan at tsullivan@counties.org with any questions or comments.

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