BILL ANALYSIS Ó
AB 1562
Page 1
Date of Hearing: May 25, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
AB
1562 (Kim) - As Amended May 16, 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 one-day partial Sales and Use Tax (SUT)
Law exemption for any "qualified disaster preparedness product"
on October 14, 2017. Specifically, this bill:
1)Establishes a SUT exemption for the state component of the SUT
Law.
2)Defines for the purposes of this partial exemption a
"qualified disaster preparedness product," which includes
portable self-powered light source, a gas or diesel fuel tank,
AB 1562
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batteries, a portable self-powered radio, a nonelectric food
storage cooler, a portable generator, a water purification
system, a battery-operated emergency beacon, or emergency
flares.
FISCAL EFFECT:
One-time revenue loss of $522,000, including approximately
$340,000 General Fund.
COMMENTS:
1)Purpose. According to the author, a sales tax holiday for
disaster preparedness supplies will raise awareness of the
need for California residents to be ready for emergencies,
such as natural disasters, storms, or earthquakes. The author
argues that AB 1562 will incentivize preparedness and will
relieve families and homeowners from bearing the full burden
in doing so.
2)Background on sales tax holidays. Sales tax holidays are a
commonly-used strategy to boost spending on certain categories
of items. In 2015, at least 17 states held sales tax holidays.
For example, Alabama has a 3-day sales tax holiday for
hurricane preparedness supplies every year. Other items that
are the subject of a sales tax holiday include clothing and
school supplies or firearms, ammunitions, and hunting
supplies.
3)Opposition. The California Tax Reform Association opposes AB
1562, arguing that sales tax holidays merely change the timing
of purchases. In the case of AB 1562, the sales tax holiday
would encourage households to purchase items that they were
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already planning on purchasing.
4)Prior legislation. AB 1120 (Tran), of 2007 and AB 2089 (Tran)
of 2005 would have exempted from sales tax the sale of
qualified disaster preparedness products. Both bills were held
in the Assembly Committee on Revenue and Taxation.
Analysis Prepared by:Luke Reidenbach / APPR. / (916)
319-2081