California Legislature—2013–14 Regular Session

Assembly BillNo. 1077


Introduced by Assembly Member Muratsuchi

February 22, 2013


An act to add and repeal Sections 6011.3, 6012.4, and 10759.5 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.

LEGISLATIVE COUNSEL’S DIGEST

AB 1077, as introduced, Muratsuchi. Sales and use taxes: vehicle license fee: exclusion: alternative fuel motor vehicles.

Existing laws impose state sales and use 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 defines the terms “gross receipts” and “sales price.”

This bill would, on and after January 1, 2014, and before January 1, 2022, exclude from the terms “gross receipts” and “sales price” the amount of the incremental cost, as defined, included in the sales price of a new alternative fuel motor vehicle.

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 law authorizes districts, as specified, to impose transactions and use taxes in accordance with the Transactions and Use Tax Law, which conforms to the Sales and Use Tax Law. Exemptions from state sales and use taxes are incorporated into these laws.

This bill would specify that this exclusion does not apply to local sales and use taxes and transactions and use taxes.

The Vehicle License Fee Law provides that the annual amount of the license fee for any vehicle is 0.65% of the market value of the vehicle, as specified. That law provides for the determination of the market value of any vehicle, for reclassification to increase the market value of a vehicle, and for the exemption of certain vehicles from the imposition of the license fee.

This bill would, on and after January 1, 2014, and before January 1, 2022, for purposes of determining the vehicle license fee, exempts from the determination of market value the incremental costs, as defined, that are incurred in the purchase of a new motor vehicle propelled by alternative fuel.

This bill would take effect immediately as a tax levy.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

P2    1

SECTION 1.  

Legislature finds and declares:

2(a) There is a wide disparity in fees levied on owners of light-,
3medium-, and heavy-duty vehicles operated on alternative fuels
4when compared to those same taxes and fees levied on owners of
5comparable gasoline and diesel fuel vehicles.

6(b) In some cases, the fees on alternative fuel vehicles are more
7than twice as much as those for conventional fuel vehicles.

8(c) The disparity in fees exists even though the alternative fuel
9vehicle may look identical to the conventional fuel vehicle and
10provide the same or lesser utility to the individual owner.

11(d) The existing California vehicle license fee on motor vehicles
12that operate on alternative fuels is higher than for comparable
13conventional fuel vehicles because alternative fuel vehicles
14generally have higher sales prices. The higher sales prices are
15largely due to the fact that these vehicles are produced in extremely
16low volumes (many assembled by hand), such that their production
17has not achieved the economies of scale that would significantly
18reduce their cost; and they use many new advanced materials and
19technologies that also have not yet achieved economies of scale,
20and therefore have a temporarily greater cost to consumers.

P3    1(e) The higher sales prices for these alternative fuel vehicles
2are expected to be a short-term, temporary situation because prices
3are expected to decline significantly to competitive levels as
4volume increases. If this does not occur, these vehicles may never
5be competitive, and automakers would likely withdraw them from
6the market. The current vehicle license fee does not reflect these
7temporary, short-term pricing situations. Instead it intrinsically,
8but incorrectly, assumes that these short-term higher prices reflect
9true long-term market value of the vehicles.

10(f) Alternative fuel vehicles provide benefits to California
11citizens that are external to, or not reflected in, their cost to the
12purchaser. These benefits include: increasing our national
13independence from foreign energy sources; providing more
14transportation choices for consumers and businesses, thus reducing
15our economic vulnerability to sudden fuel price increases caused
16by external or internal events; reducing air pollutants, climate
17change pollutants, and toxic emissions from mobile sources;
18reducing future pressures for additional environmental controls
19on existing and new businesses and industries in California; and
20 creating new advanced transportation technology jobs and
21industries in California.

22(g) It is the public policy of the State of California, the federal
23government, and many local governments, to encourage the
24development and use of alternative fuel vehicles, for the purpose
25of providing the benefits described above to all California citizens.

26(h) Existing vehicle license fee calculations, as they relate to
27the determination of market value of alternative fuel vehicles, do
28not reflect the critical short-term pricing issues described above,
29nor the external benefits that accrue to all California citizens.
30Additionally, these existing fees act as a significant disincentive
31to potential purchasers of alternative fuel vehicles, and as such,
32are contrary to existing public policies at all levels of government.

33(i) It is the intent of the Legislature to equalize the vehicle
34license fee between alternative fuel vehicles and conventional fuel
35vehicles for a period of eight years, beginning January 1, 2014,
36and ending December 31, 2021. During this time period it is the
37intent of the Legislature that the incremental or differential cost
38between an alternative fuel vehicle and a comparable conventional
39fuel vehicle, as determined by the State Energy Resources
P4    1Conservation and Development Commission, should be exempt
2from the vehicle license fee.

3

SEC. 2.  

Section 6011.3 is added to the Revenue and Taxation
4Code
, to read:

5

6011.3.  

(a) Notwithstanding Section 6011 or any other law,
6on and after January 1, 2014, and before January 1, 2022, “sales
7price” from the sale of a new alternative fuel motor vehicle shall
8not include the amount of the incremental cost.

9(b) For purposes of this section, all of the following shall apply:

10(1) “Alternative fuel vehicle” means a motor vehicle subject to
11registration under the Vehicle Code that operates some or all of
12the time on a fuel other than gasoline or diesel.

13(2) “Incremental cost” means the amount equal to the reasonable
14difference between the cost of the new alternative fuel motor
15vehicle and the cost of a comparable gasoline or diesel fuel vehicle.
16This amount shall constitute the maximum incremental cost for
17purposes of the exclusion in subdivision (a), and shall be reduced,
18as appropriate, in accordance with the actual sales price of the
19vehicle.

20(3) “Motor vehicle” means “motor vehicle” as defined by
21Section 415 of the Vehicle Code.

22(c) The actual incremental cost shall be stated in the contract
23for sale or lease with the purchaser, and shall be reported to the
24board quarterly.

25(d) Notwithstanding any provision of the Bradley-Burns
26Uniform Local Sales and Use Tax Law (Part 1.5 (commencing
27with Section 7200)) or the Transactions and Use Tax Law (Part
281.6 (commencing with Section 7251)), the exclusion established
29by this section shall not apply with respect to any tax levied by a
30county, city, or district pursuant to, or in accordance with, either
31of those laws.

32(e) This section shall be repealed on January 1, 2022.

33

SEC. 3.  

Section 6012.4 is added to the Revenue and Taxation
34Code
, to read:

35

6012.4.  

(a) Notwithstanding Section 6012 or any other law,
36on and after January 1, 2014, and before January 1, 2022, “gross
37receipts” from the sale of a new alternative fuel motor vehicle shall
38not include the amount of the incremental cost.

39(b) For purposes of this section, all of the following shall apply:

P5    1(1) “Alternative fuel vehicle” means a motor vehicle subject to
2registration under the Vehicle Code that operates some or all of
3the time on a fuel other than gasoline or diesel.

4(2) “Incremental cost” means the amount equal to as the
5reasonable difference between the cost of the new alternative fuel
6motor vehicle and the cost of a comparable gasoline or diesel fuel
7vehicle. This amount shall constitute the maximum incremental
8cost for purposes of the exclusion in subdivision (a), and shall be
9reduced, as appropriate, in accordance with the actual sales price
10of the vehicle.

11(3) “Motor vehicle” means “motor vehicle” as defined by
12Section 415 of the Vehicle Code.

13(c) The actual incremental cost shall be stated in the contract
14for sale or lease with the purchaser, and shall be reported to the
15board quarterly.

16(d) Notwithstanding any provision of the Bradley-Burns
17Uniform Local Sales and Use Tax Law (Part 1.5 (commencing
18with Section 7200)) or the Transactions and Use Tax Law (Part
191.6 (commencing with Section 7251)), the exclusion established
20by this section shall not apply with respect to any tax levied by a
21county, city, or district pursuant to, or in accordance with, either
22of those laws.

23(e) This section shall be repealed on January 1, 2022.

24

SEC. 4.  

Section 10759.5 is added to the Revenue and Taxation
25Code
, to read:

26

10759.5.  

(a) For purposes of determining the vehicle license
27fee imposed by this part, there are exempted from the determination
28of market value, the incremental cost of a new motor vehicle
29propelled by alternative fuels. This exemption shall apply to the
30subsequent payments of the vehicle license fee.

31(b) For purposes of this section, the following shall apply:

32(1) “Incremental cost” means the amount equal to the reasonable
33difference between the cost of the motor vehicle defined in
34subdivision (a) and the cost of a comparable gasoline or diesel fuel
35vehicle. This amount shall constitute the maximum incremental
36cost for purposes of the exemption in subdivision (a), and shall be
37reduced, as appropriate, in accordance with the actual sales price
38of the vehicle. The actual incremental cost shall be stated in the
39contract for sale or lease with the purchaser.

P6    1(2) “Motor vehicle propelled by alternative fuels” means a motor
2vehicle that operates some or all of the time on a fuel other than
3gasoline or diesel.

4(c) This section shall become operative on January 1, 2014, and
5shall remain in effect only until January 1, 2022, and as of that
6date is repealed.

7

SEC. 5.  

This act provides for a tax levy within the meaning of
8Article IV of the Constitution and shall go into immediate effect.



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