Opposition from the California Chamber of Commerce and the business community helped to stop two job killer bills in their policy committees this week.
• AB 479 (Gonzalez Fletcher; D-San Diego) would have exempted feminine sanitary products and infant diapers from sales tax and instead raised the excise tax on alcoholic products to offset the cost of exempting these products from sales tax. The bill failed to pass the Assembly Revenue and Taxation Committee on May 8.
• SB 300 (Monning; D-Carmel) required this warning be placed on certain beverages – “STATE OF CALIFORNIA SAFETY WARNING: Drinking beverages with added sugar(s) contributes to obesity, type 2 diabetes, and tooth decay.” The bill was very specific about the size of type, placement of warning and characters per linear inch on each product according to the amount of beverage contained. Vending machines, self-serve dispensers and sit down restaurants all must provide the warning. The bill was never taken up for a vote in the Senate Health Committee.
AB 479: Targeted Tax
CalChamber identified AB 479 as a job killer because it unfairly targets one category of taxpayers with an additional excise tax and floor tax, which will raise costs and limit the ability to grow or maintain business in California.
AB 479 proposed to add an additional excise tax on manufacturers, wholesalers, and importers of distilled spirits, as well as a floor tax, in order to mitigate the loss of revenue from exempting tampons and diapers from the sales and use tax.
CalChamber had no concern with exempting these items from the sales and use tax. Rather, its concern is solely with the proposed revenue source to cover the loss resulting from exempting these products.
Imposing a targeted tax on one category of taxpayers to support this revenue loss will unfairly raise their costs, which will either be passed on to consumers to the extent possible, or result in limited growth and even potential cuts to labor.
AB 479 failed to pass the Assembly Revenue and Taxation Committee, 1-6, after committee members expressed concern over raising taxes.
Ayes: Mullin (D-South San Francisco).
Noes: T. Allen (R-Huntington Beach), Brough (R-Dana Point), Chen (R-Walnut), Dababneh (D-Encino), Quirk (D-Hayward), Ridley-Thomas (D-Los Angeles).
No votes recorded: Bocanegra (D-Pacoima), Burke (D-Inglewood), Gipson (D-Carson).
The bill was granted reconsideration.
SB 300: Lawsuit Exposure
SB 300 was tagged as a job killer because the bill exposed manufacturers and retailers of sweetened beverages to significant liability. The author twice pulled the bill from being heard in the Senate Health Committee. Senator Bill Monning told the Los Angeles Times he “was not confident the bill would receive enough votes to pass out.”
Consumers would have been able to sue for a violation of this new labeling requirement under California’s Unfair Competition Law. So not only could a business incur a civil penalty of up to $500, it also would have to defend against lawsuits.
It is conceivable that a class action suit would be brought based on the assertion that consuming these beverages contributes to a person’s obesity, diabetes and tooth decay, and that companies would be held liable for millions of dollars in awards for a person’s choice to consume the beverage.
Although SB 300 is dead for the remainder of the 2017 legislative session, the bill may be revived in 2018.
To see the remaining job killer bills, visit www.cajobkillers.com/priorities.