BILL ANALYSIS Ó
AB 1561
Page A
ASSEMBLY THIRD READING
AB
1561 (Cristina Garcia and Chang)
As Amended May 31, 2016
Majority vote. Tax levy
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|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Revenue & |9-0 |Ridley-Thomas, | |
|Taxation | |Brough, Dababneh, | |
| | |Gipson, Mullin, | |
| | |O'Donnell, Patterson, | |
| | |Quirk, Wagner | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Appropriations |18-1 |Gonzalez, Bigelow, |Gallagher |
| | |Bloom, Bonilla, | |
| | |Bonta, Calderon, | |
| | |Chang, Daly, Eggman, | |
| | | | |
| | | | |
| | |Eduardo Garcia, | |
| | | | |
| | | | |
| | |Roger Hernández, | |
| | |Holden, Jones, Quirk, | |
| | |Santiago, Wagner, | |
| | |Weber, Wood | |
AB 1561
Page B
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| | | | |
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SUMMARY: Establishes a sales and use tax (SUT) exemption for
tampons, sanitary napkins, menstrual cups, and menstrual
sponges. Specifically, this bill:
1)Provides that, notwithstanding existing law, the state shall
not reimburse any local agency for SUT revenues lost as a
result of this exemption.
2)Takes immediate effect as a tax levy, but only becomes
operative on the first day of the first calendar quarter
commencing more than 90 days after this bill's effective date.
3)Sunsets after five years.
EXISTING LAW:
1)Imposes a sales tax on retailers for the privilege of selling
tangible personal property (TPP), absent a specific exemption.
The tax is based upon the retailer's gross receipts from TPP
sales in this state.
2)Imposes a complimentary use tax on the storage, use, or other
consumption of TPP purchased out-of-state and brought into
California. The use tax is imposed on the purchaser; and
unless the purchaser pays the use tax to an out-of-state
retailer registered to collect California's use tax, the
purchaser remains liable for the tax. The use tax is set at
the same rate as the state's sales tax and must generally be
remitted to the State Board of Equalization (BOE).
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FISCAL EFFECT: According to the Assembly Appropriations
Committee, estimated annual state and local revenue loss of $20
million, including $9.5 million from the General Fund.
COMMENTS:
1)The author has provided the following statement in support of
this bill:
AB 1561 is a bipartisan effort to make menstrual products
exempt from the sales and use tax at both the state and
local level. California women pay over 20 million
dollars annually for taxing tampons and sanitary napkins,
which are essential health items for women. As a state
we should not be taxing women for being born women. The
tax is especially unjust for women who are low-income or
homeless who struggle to pay for these basic necessities
each month for the majority of their adult life.
Menstrual products need to be more accessible and
eliminating the tax on tampons and sanitary napkins is an
important first step in making them more affordable.
California's tax code exempts health items like walkers,
medical identification tags, and prescription medication,
including Viagra. Tampons and sanitary napkins are not
exempt even though women do not have the choice to ignore
their periods and are far from being luxuries items.
When these items are labelled as "feminine hygiene"
products, it makes people forget that the FDA regulates
both products as medical devices. These is no equivalent
health product that is used only by one gender on a
monthly basis for 40 years of life. Across the world,
countries as well as select states in the US are
organizing to repeal the sales tax on feminine hygiene
products. California should continue to be a leader by
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addressing the gender inequality in our tax code and
exempt menstrual products.
2)The BOE notes the following in its staff analysis of this
bill:
Certain care providers and hospitals would additionally
benefit from the proposed exemption: "Since sales of these
products to these service enterprises are currently subject
to tax, this bill would provide an additional benefit to
these entities that purchase these products for their
clients or patients."
3)Assembly Revenue and Taxation Committee Comments:
a) An inherently regressive tax: The SUT has been widely
criticized as a regressive exaction that most heavily
impacts those least able to pay. For example, a survey by
the Nevada Legislative Counsel Bureau long ago concluded
that in the case of a retail sales tax with food exempt,
"the lowest income group would experience the highest ratio
of tax to income ...." (Survey of Sales Taxes Applicable
to Nevada 59 (Bull. No. 3, May, 1948).) Others, however,
contend that a degree of progressivity is provided via the
various exemptions built into most state SUT laws (i.e.,
for certain necessities of life such as food, housing, and
medical care).
Proponents of this bill might argue that an exemption for
sanitary napkins and tampons would further promote a degree
of progressivity in an already regressive tax regime.
Proponents might also note that, to reduce the regressive
nature of the SUT tax, exemptions have been enacted for
numerous necessities of life, including food and
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prescription medications. Critics, however, might contend
that SUT exemptions are a blunt instrument for affecting
social policy. While this bill would provide financial
relief to low-income women struggling to make ends meet, it
would also provide relief indiscriminately to wealthy
consumers who might not even notice the exemption.<1>
b) Taking a different tact: A recent editorial in the New
York Times noted that even without being taxed, tampons and
pads are unaffordable for some individuals. As a result,
the editorial noted that policymakers around the country
are offering different proposals for ensuring that women
have access to these products. Specifically, New York City
Councilmember Julissa Ferreras-Copeland is working on
legislation to require all public schools in the city to
provide free tampons and pads in restrooms. Moreover, in
Congress, Representative Grace Meng of New York introduced
legislation allowing individuals to pay for feminine
hygiene products with their health care spending accounts.
("End the Tampon Tax." Editorial. New York Times 8
February 2016, page A24.)
Analysis Prepared by:
M. David Ruff / REV. & TAX. / (916) 319-2098
FN: 0003110
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<1>
The author's office notes that women in California pay roughly
$7 per month on sanitary napkins and tampons. Applying the
statewide average SUT rate of 8.335%, purchasers are paying
roughly $0.58 per month in SUT on these products.
AB 1561
Page F