BILL ANALYSIS Ó
AB 1561
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Date of Hearing: May 18, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
AB
1561 (Cristina Garcia) - As Amended April 28, 2016
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|Policy | Revenue and Taxation |Vote:| 9 - 0 |
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill establishes a sales and use tax exemption for tampons,
sanitary napkins, menstrual cups, and menstrual sponges. The
bill sunsets the exemption on January 1, 2027.
FISCAL EFFECT:
Estimated annual state and local revenue loss of $20 million,
including $9.5 million GF.
AB 1561
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COMMENTS:
1)Purpose and background. According to the author, this bill
will end an unfair tax that disproportionately harms
low-income women. The author notes that California women pay
over $20 million annually for taxing tampons and sanitary
napkins, which are essential health items for women. Exempting
these products from the sales and use tax, like other health
items such as prescription medication or walkers, will make
the tax code more equitable and help low-income women afford
these necessities.
2)Sales tax exemptions are generally not a cost-effective tool.
The sales and use tax is inherently regressive. Those with the
lowest incomes pay the highest percentage of their income in
sales and use tax. To balance the tax's regressivity, various
exemptions are built in to provide relief for certain
necessities, such as food. Allowing an additional exemption
for tampons will undoubtedly help low-income women, but it
will also provide similar tax relief to higher-income
taxpayers who arguably do not need it. A more targeted
approach, such as subsidies directed at low-income women,
could produce the same benefit for that population but at
lower cost to the state.
3)Opposition and impact on counties. The California State
Association of Counties (CSAC) opposes this bill because it
exempts the full sales and use tax, and not just the state
portion. As a result, this bill will have an impact on
revenues that are reserved for local governments.
A partial exemption is one solution that would minimize the
revenue impact on local governments. However, partial
exemptions, while cheaper for local governments, result in an
even lower tax cut for women and would be more difficult for
the Board of Equalization (BOE) to administer.
AB 1561
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Analysis Prepared by:Luke Reidenbach / APPR. / (916)
319-2081