BILL ANALYSIS Ó
AB 1561
Page A
GOVERNOR'S VETO
AB
1561 (Cristina Garcia and Chang)
As Enrolled August 30, 2016
2/3 vote
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|ASSEMBLY: |78-0 |(June 2, 2016) |SENATE: |38-0 |(August 18, |
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|ASSEMBLY: |77-0 |(August 23, | | | |
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Original Committee Reference: REV. & TAX.
SUMMARY: Establishes a sales and use tax (SUT) exemption for
tampons, sanitary napkins, menstrual sponges, and menstrual
cups.
AB 1561
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The Senate amendments:
1)Provide that the exemption shall become operative on January
1, 2017.
2)Add coauthors.
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).
AS PASSED BY THE ASSEMBLY, this bill:
1)Provided that, notwithstanding existing law, the state shall
not reimburse any local agency for SUT revenues lost as a
result of this exemption.
2)Took immediate effect as a tax levy, but only became operative
on the first day of the first calendar quarter commencing more
than 90 days after this bill's effective date.
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3)Sunset after five years.
FISCAL EFFECT: According to the Senate Appropriations
Committee, the BOE indicates that this bill would result in a
2016-17 state and local revenue loss of $20 million, $10 million
of which would be General Fund. The agency would incur
absorbable implementation costs.
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 labeled as
"feminine hygiene" products, it makes people forget that
the FDA [Food and Drug Administration] regulates both
products as medical devices. There is no equivalent health
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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 [United States] are organizing to
repeal the sales tax on feminine hygiene products.
California should continue to be a leader by 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
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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
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 Feb.
2016, page A24.)
GOVERNOR'S VETO MESSAGE:
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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.
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I am returning the following seven bills without my
signature:
Assembly Bill 717
Assembly Bill 724
Assembly Bill 1561
Assembly Bill 2127
Assembly Bill 2728
Senate Bill 898
Senate Bill 907
Each of these bills creates a new tax break or expands an
existing tax break. In total, these bills would reduce
revenues by about $300 million through 2017-18.
As I said last year, tax breaks are the same as new
spending - they both cost the General Fund money. As such,
they must be considered during budget deliberations so that
all spending proposals are weighed against each other at
the same time. This is even more important when the
state's budget remains precariously balanced.
Therefore, I cannot sign these measures.
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Analysis Prepared by:M. David Ruff / REV. & TAX. / (916)
319-2098 FN: 0005055