Budget & Taxes (Sales Tax)

Existing state sales and use tax laws impose a tax on retailers measured by the gross receipts from the sale of tangible personal property sold at retail in this state, or on the storage, use, or other consumption in this state of tangible personal property purchased from a retailer for storage, use, or other consumption in this state. The Sales and Use Tax Law provides various exemptions from those taxes. This bill would, until January 1, 2032, exempt from those taxes the gross receipts from the sale in this state of, and the storage, use, or other consumption in this state of, over-the-counter medication, as defined. Existing law requires a bill authorizing a new tax expenditure to contain, among other things, specific goals, purposes, and objectives that the tax expenditure will achieve, detailed performance indicators, and data collection requirements. This bill would make findings detailing the goals of the above-described tax expenditure and performance indicators for determining whether the tax expenditure meets those goals. The Bradley-Burns Uniform Local Sales and Use Tax Law authorizes counties and cities to impose local sales and use taxes in conformity with the Sales and Use Tax Law, and existing laws authorize districts, as specified, to impose transactions and use taxes in accordance with the Transactions and Use Tax Law, which generally conforms to the Sales and Use Tax Law. Amendments to the Sales and Use Tax Law are automatically incorporated into the local tax laws. This bill would provide that the exemption created by this bill does not apply to local sales and use taxes or transactions and use taxes. Existing law imposes or dedicates certain state sales and use tax rates for local funding, including through the Local Revenue Fund 2011. This bill would provide that the exemption created by this bill does not apply to those state sales and use tax rates imposed or dedicated for local government funding, including those rates for which revenues are deposited into the Local Revenue Fund 2011. This bill would take effect immediately as a tax levy.

Existing law, the Motor Vehicle Fuel Tax Law, imposes a tax upon each gallon of motor vehicle fuel removed from a refinery or terminal rack in this state, entered into this state, or sold in this state, at a specified rate per gallon. Existing unfair competition laws establish a statutory cause of action for unfair competition, including any unlawful, unfair, or fraudulent business act or practice and unfair, deceptive, untrue, or misleading advertising and acts prohibited by false advertisement laws. This bill would suspend the imposition of the tax on motor vehicle fuels for one year. The bill would require that all savings realized based on the suspension of the motor vehicle fuels tax by a person other than an end consumer, as defined, be passed on to the end consumer, and would make the violation of this requirement an unfair business practice, in violation of unfair competition laws, as provided. The bill would require a seller of motor vehicle fuels to provide a receipt to a purchaser that indicates the amount of tax that would have otherwise applied to the transaction. This bill would also direct the Controller to transfer a specified amount from the General Fund to the Motor Vehicle Fuel Account in the Transportation Tax Fund. By transferring General Fund moneys to a continuously appropriated account, this bill would make an appropriation. This bill would declare that it is to take effect immediately as an urgency statute.

The California Constitution conditions the imposition of a special tax by a local government upon the approval of 23 of the voters of the local government voting on that tax, and prohibits these entities from imposing an ad valorem tax on real property or a transactions or sales tax on the sale of real property. The Supreme Court of California interpreted this provision and other provisions restricting the authority of local governments to impose, extend, or increase taxes as not restricting the authority of voters to impose taxes via initiative. This measure would, beginning January 1, 2027, prohibit a local government, including the electorate of a local government exercising the initiative power, from imposing, extending, or increasing any special tax, except as provided, unless and until that tax is submitted to the electorate and approved by a 23 vote. The measure would prohibit a local government, including the electorate of a local government exercising the initiative power, from imposing ad valorem taxes on real property, except as provided pursuant to specified constitutional provisions.

Existing sales and use tax laws impose taxes on retailers measured by the gross receipts from the sale of tangible personal property sold at retail in this state, or on the storage, use, or other consumption in this state of tangible personal property purchased from a retailer for storage, use, or other consumption in this state. The Sales and Use Tax Law provides various exemptions from those taxes, including a partial exemption from those taxes, on and after July 1, 2014, and before July 1, 2030, for the gross receipts from the sale of, and the storage, use, or other consumption of, among other things, qualified tangible personal property purchased by a qualified person for purchases not exceeding $200,000,000, for use primarily in manufacturing, processing, refining, fabricating, or recycling of tangible personal property, as specified. Existing law requires the California Department of Tax and Fee Administration to provide a report to the Joint Legislative Budget Committee and the Department of Finance of, among other things, the total dollar amount of exemptions, as specified. Existing law repeals these provisions on January 1, 2031. This bill would, instead, extend the above-described partial exemption from those taxes until January 1, 2031, and would remove the above-described reporting requirement pertaining to the California Department of Tax and Fee Administration. The bill would make various conforming changes and repeal these provisions on January 1, 2036. Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals, purposes, and objectives that the tax expenditure will achieve, detailed performance indicators, and data collection requirements. This bill would require the California Department of Tax and Fee Administration, if requested by the Legislature, to submit a report to the Legislature on the exemption and would provide findings and declarations relating to the goals of the exemption. The Bradley-Burns Uniform Local Sales and Use Tax Law authorizes counties and cities to impose local sales and use taxes in conformity with the Sales and Use Tax Law, and existing laws authorize districts, as specified, to impose transactions and use taxes in accordance with the Transactions and Use Tax Law, which generally conforms to the Sales and Use Tax Law. Amendments to the Sales and Use Tax Law are automatically incorporated into the local tax laws. Existing law requires the state to reimburse counties and cities for revenue losses caused by the enactment of sales and use tax exemptions. This bill would provide that, notwithstanding Section 2230 of the Revenue and Taxation Code, no appropriation is made and the state shall not reimburse any local agencies for sales and use tax revenues lost by them pursuant to this bill. This bill would take effect immediately as a tax levy.

Existing statutory law, enacted by Proposition 62, as approved by the voters at the November 4, 1986, statewide general election, prohibits a local government or district from imposing any transaction tax or sales tax on the sale of real property within the city, county, or district, except as provided. The California Constitution authorizes cities organized under a charter to make and enforce all ordinances and regulations in respect to municipal affairs, which supersede inconsistent general laws. Existing law, the Documentary Transfer Tax Act, authorizes the imposition of a tax by a county or city, as provided, with respect to specified instruments that transfer specified interests in real property. This bill would require a legislative body of a city, as specified, before it adopts any transfer tax on the sale of real property, to develop and post on its internet website an analysis that examines, at a minimum, the effect of the proposed transfer tax on, among other things, the production of affordable housing, including affordable housing produced by market-rate housing projects. The bill would include findings that changes proposed by this bill address a matter of statewide concern rather than a municipal affair and, therefore, apply to all cities, including charter cities.

Existing sales and use tax laws impose taxes on retailers measured by the gross receipts from the sale of tangible personal property sold at retail in this state, or on the storage, use, or other consumption in this state of tangible personal property purchased from a retailer for storage, use, or other consumption in this state. The California Alternative Energy and Advanced Transportation Financing Authority Act establishes the California Alternative Energy and Advanced Transportation Financing Authority. The act authorizes, until January 1, 2026, the authority to provide financial assistance to a participating party by authorizing exclusions from sales and use tax for certain projects, including those that promote California-based manufacturing, California-based jobs, advanced manufacturing, the reduction of greenhouse gases, or a reduction in air and water pollution or energy consumption. The Sales and Use Tax Law, for the purposes of the taxes imposed pursuant to that law, until January 1, 2026, excludes the lease or transfer of title of tangible personal property constituting one of those projects to any contractor for use in the performance of a construction contract for a participating party that will use that property as an integral part of the approved project. This bill would extend to January 1, 2028, the authorization to provide financial assistance in the form of a sales and use tax exclusion for projects approved by the authority. The bill would add electrical generation facilities using nuclear fusion technology to the types of projects qualifying for this sales and use tax exclusion. The bill would, on and after January 1, 2026, for an applicant that, together with its parent corporation and subsidiaries, employs 500 or more employees, prohibit the authority from approving a project unless the applicant certifies that the applicant and its subcontractors will comply with certain labor requirements. The bill would make other conforming changes. This bill would take effect immediately as a tax levy.

Existing law generally designates the State Air Resources Board as the state agency with the primary responsibility for the control of vehicular air pollution, and designates air pollution control districts and air quality management districts with the primary responsibility for the control of air pollution from all sources other than vehicular sources. Existing law requires the state board to inventory sources of air pollution within the air basins of the state, determine the kinds and quantity of air pollutants, and monitor air pollutants in cooperation with districts and other agencies. Existing law requires the state board to adopt standards of ambient air quality for each air basin in consideration of the public health, safety, and welfare, including, but not limited to, health, illness, irritation to the senses, aesthetic value, interference with visibility, and effects on the economy. Existing law authorizes these standards to vary from one air basin to another. This bill would require the state board, in consultation with specified entities, to develop, as provided, a response framework that establishes best practices and guidance for addressing fugitive and natural sources of hydrogen sulfide gas and for community preparation and response to hydrogen sulfide exposure events originating from these sources. The bill would require the state board, in developing the response framework, to conduct at least 3 public workshops, including at least one located in the Tijuana River Valley region, at least one located in the Salton Sea region, and at least one selected in consultation with a community that has experienced significant hydrogen sulfide exposure. The bill would require the Office of Environmental Health Hazard Assessment to update the acute and chronic reference exposure levels for hydrogen sulfide and to develop additional health guidance values for hydrogen sulfide, if the need is identified by the state board, in consultation with the office, during development of the response framework.