BILL ANALYSIS �
REVISED
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: AB 163 HEARING: 6/5/13
AUTHOR: Atkins FISCAL: Yes
VERSION: 4/9/13 TAX LEVY: Yes
CONSULTANT: Miller
SALES & USE TAX EXEMPTIONS: MILITARY THRIFT STORE
Extends the sales and use tax exemption for goods sold by a
thrift stores that are both located on a military
installation and operated by a "military welfare society"
for 10-years.
Background and Existing Law
Sales Tax
The state sales and use tax rate is 7.50% as detailed below
and is general imposed on all tangible personal property
unless specifically exempt. Cities and Counties may
increase the sales and use tax rate up to 2% for either
specific or general purposes with a vote of the people.
-------------------------------------------------------------
| | | |
| Rate | Jurisdiction | Purpose/Authority |
| | | |
|-------+--------------------+--------------------------------|
| | | |
|3.9375%|State (General |State general purposes |
| |Fund) | |
| | | |
|-------+--------------------+--------------------------------|
| | | |
|1.0625%|Local Revenue Fund |Realignment of local public |
| |2011 |safety services |
| | | |
| | | |
| | | |
AB 163 -- 4/9/13 -- Page 2
|-------+--------------------+--------------------------------|
| | | |
| 0.25% |State (Fiscal |Repayment of the Economic |
| |Recovery Fund) |Recovery Bonds |
| | | |
|-------+--------------------+--------------------------------|
| | | |
| 0.25% |State (Education |Schools and community college |
| |Protection Account) |funding |
| | | |
|-------+--------------------+--------------------------------|
| | | |
| 0.50% |State (Local |Local governments to fund |
| |Revenue Fund) |health and welfare programs |
| | | |
|-------+--------------------+--------------------------------|
| | | |
| 0.50% |State (Local Public |Local governments to fund |
| |Safety Fund) |public safety services |
| | | |
|-------+--------------------+--------------------------------|
| | | |
| 1.00% |Local (City/County) |City and county general |
| | |operations. Dedicated to county |
| | |transportation purposes |
| |0.75% City and | |
| |County | |
| | | |
| |0.25% County | |
|-------+--------------------+--------------------------------|
| | | |
| 7.50% |Total Statewide | |
| |Rate | |
| | | |
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Many items are fully exempted from the sales and use tax in
this state (prescription drugs, food, poultry litter) but
only a handful are partially exempted from the sales tax at
the rate of 5.5%; specifically: Farm equipment and
machinery; Diesel fuel used for farming and food
processing; Teleproduction and postproduction equipment;
Timber harvesting equipment and machinery; and Racehorse
breeding stock.
Military thrift stores
AB 163 -- 4/9/13 -- Page 3
Existing state law provides a sales and use tax exemption
until January 1, 2014 for goods sold by a thrift store that
is both located on a military installation and operated by
a military welfare society. A military welfare society, in
partnership with the United Sates Department of Defense,
provides financial, educational and other assistance to
members of the Armed Forces, eligible family members and
survivors in need.
Proposed Law
Senate Bill 163 removes the sunset for the sales and use
tax exemption for thrift stores operated by a military
welfare society and on a military.
State Revenue Impact
The BOE estimates that this exemption results in annual
state and local sales and use tax revenue losses of
approximately $15,000.
Comments
1. Purpose of the bill . According to the author, this
bill was introduced to continue the sales and use tax
exemption for the Navy-Marine Corps Relief Society thrift
stores on military bases. The author notes this exemption
was created in 2009 and will expire if no action is taken.
These stores operated by the society use their income to
provide financial, educational and other general assistance
to active duty and retired services members, families and
survivors. The author notes the proceeds from these thrift
stores have provided $13.4 million in financial assistance,
and 3,500 military families have taken financial education
classes. The author points out that other thrift stores
such as Goodwill and the Salvation Army are already exempt
from the sales and use tax, an exemption that has existed
since 1959.
AB 163 -- 4/9/13 -- Page 4
Assembly Actions
Assembly Revenue & Taxation9-0
Assembly Appropriations 17-0
Assembly Floor 76-0
Support and Opposition (5/30/13)
Support : Navy Region Southwest (Sponsor); State Board of
Equalization; Navy-Marine Corps Relief Society; Senator
George Runner.
Opposition : None received.