BILL ANALYSIS Ó
AB 187
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Date of Hearing: May 24, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 187 (Bonta and Dickinson) - As Amended: May 15, 2013
Policy Committee: Revenue and
Taxation Vote: 5-3
Urgency: No State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill imposes a tax on retailers at the rate of 10% of the
gross receipts from ammunition sales in this state on or after
January 1, 2014. Specifically, this bill:
1)Requires the State Board of Equalization (BOE) to administer
and collect the new taxes pursuant to the Fee Collection
Procedures Law.
2)Provides that two-thirds of all revenues, net of refunds and
administrative costs, shall be deposited in the Public Safety
Emergency Prevention Fund, created by this bill. All moneys
in the fund shall, upon appropriation by the Legislature, be
expended by the Office of Emergency Services to support public
safety programs in high crime municipalities.
3)Provides that one-third of all revenues, net of refunds and
administrative costs, shall be deposited into the School-Based
Early Mental Health Intervention and Prevention Services
Matching Grant Program.
4)Exempts from taxation ammunition purchased by any peace
officer required to carry or use a firearm that uses
ammunition while on duty, or by any governmental law
enforcement agency employing that peace officer, for use in
the normal course of employment.
FISCAL EFFECT
1)The BOE estimates that this bill would generate annual
ammunition tax revenues of about $90 million.
AB 187
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2)Based on these estimates, the bill would result in about $60
million for grants to support public safety programs and about
$30 million for grants for mental health intervention and
prevention.
COMMENTS
1)Purpose . The author notes, communities are suffering from a
combination of budget cuts to public safety and increases in
violent crime. According to the author, the City of Oakland
suffered 131 homicides in 2012, 21 more than 2011. As of
October 2012, Oakland had 629 police officers, a 10-year low,
down from a high of 837 officers just four years ago. The
author states that taxing firearms and ammunition dates back
almost 100 years, to 1919, and that AB 187 simply allows the
state to support public safety needs and protect communities
from violence.
2)Support . Proponents of this bill, including the City of
Oakland and the Law Center to Prevent Gun Violence, contend AB
187 will tighten ammunition sales in California and provide a
much-needed revenue stream to support public safety efforts,
especially in high-crime areas. They note the impact of gun
violence places a tremendous strain on the emotional and
financial stability of our communities and leads to increased
public safety costs for cities across California.
3)Opposition . Opponents note this bill has an unwarranted
impact on licensed hunters who purchase shotgun and rifle
ammunition for legitimate sporting purposes. They state not
only is this type of sporting ammunition used in relatively
few crimes overall in California, but the excellent safety
record of licensed hunters who purchase most of this
ammunition clearly demonstrates that they are using it
responsibly. They argue AB 187 indiscriminately penalizes
hunters and other law abiding citizens for the illegal or
irresponsible acts of others.
4)Collection issues . BOE notes ammunition retailers already
collect and remit sales and use tax on their retail ammunition
sales in California. Most retailers sell other tangible
personal property subject to sales and use tax. Collecting an
additional tax from ammunition purchasers will require
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retailers to keep track of ammunition sales separately from
other sales of tangible personal property. Cashiers at
smaller supply stores, which are typically not computerized,
must manually apply the additional tax, which could likely
lead to collection and reporting errors.
5)Federal tax. Federal law imposes a Firearms and Ammunition
Excise Tax (FAET) on the sale of firearms and ammunition by
manufacturers, producers and importers. Because the federal
tax is imposed higher up the distribution chain, and the FAET
does not require retailers to track ammunition sales
separately from other sales, the FAET does not result in the
type of compliance costs for smaller retailers and attendant
reporting errors that could affect this bill.
6)Related legislation .
a) AB 180 (Bonta), of the current legislative session,
would authorize the City of Oakland to enact an ordinance
that is more restrictive than state law regulating the
registration or licensing of commercially manufactured
firearms. AB 180 is on the Assembly floor.
b) AB 760 (Dickinson), of the current legislative session,
would impose a tax on retailers for the privilege of
selling ammunition, as defined, at the rate of $0.05 per
item of ammunition sold in this state on or after January
1, 2014 and directs funding to the School-Based Early
Mental Health Intervention and Prevention Services Matching
Grant Program. AB 760 is on the Assembly Revenue and
Taxation Committee's Suspense File.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081