BILL ANALYSIS                                                                                                                                                                                                    Ó






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                                   THIRD READING 


          Bill No:  SB 680
          Author:   Wieckowski (D), et al.
          Amended:  1/26/16  
          Vote:     21  

           SENATE TRANS. & HOUSING COMMITTEE:  9-0, 4/21/15
           AYES:  Beall, Cannella, Allen, Bates, Galgiani, Leyva, McGuire,  
            Roth, Wieckowski
           NO VOTE RECORDED:  Gaines, Mendoza

           SENATE GOVERNANCE & FIN. COMMITTEE:  5-2, 5/6/15
           AYES:  Hertzberg, Beall, Hernandez, Moorlach, Pavley
           NOES:  Nguyen, Lara

           SENATE APPROPRIATIONS COMMITTEE:  6-1, 1/21/16
           AYES:  Lara, Bates, Beall, Hill, Mendoza, Nielsen
           NOES:  Leyva

           SUBJECT:   Sales taxes:  exemption:  motor vehicles


          SOURCE:    Author

          DIGEST:   This bill exempts from sales taxes any new car bought  
          in California by a non-resident which is permanently moved and  
          used outside of California within 30 days.  These provisions  
          sunset on January 1, 2020.

          ANALYSIS:     Existing law subjects a vehicle purchase in  
          California to California sales tax at the location at which the  
          transaction takes place, regardless of whether the purchaser  
          moves the vehicle outside the state.
          








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          This bill exempts from sales tax the purchase of a new vehicle  
          by a non-resident if the purchaser moves the vehicle out of  
          state within 30 days, receives a one-trip permit from the  
          Department of Motor Vehicles (DMV), and receives an exemption  
          certificate from the Board of Equalization.

          Comments
          
          1)Purpose.  According to the author, this bill is necessary to  
            eliminate a disincentive for purchasing a car in California.   
            Under current law, a non-resident who purchases a vehicle in  
            California has to pay California sales tax on the purchase  
            even though the car is being used and registered in the state  
            where the purchaser resides.  The purchaser would also owe  
            sales tax to the state where the new car was registered.   
            While this would be offset by the California sales tax, there  
            is some risk that the offset wouldn't be sufficient to cover  
            the California tax, according to the author.  

            In addition, several states, such as Texas, have prohibited  
            Tesla from selling its cars directly to customers.  Tesla's  
            Texas customers then have to buy their cars out of state and  
            drive or ship them in.  The author is hoping that some of  
            those customers will come to tour the Tesla factory in Fremont  
            to complete their purchase and then spend some time visiting  
            other parts of the state.  Customers of some high-end vehicles  
            do just that in Europe.

          2)Non-California users ineligible for California incentives.   
            California has a number of programs to encourage the purchase  
            of low- and zero-emission vehicles which are funded by  
            Californians.  This bill makes vehicles which qualify for this  
            sales tax exemption ineligible for the California Clean  
            Vehicle Rebate Program, the carpool lane decal program, and  
            any other electric vehicle incentive program offered by the  
            state.

          3)Cars only.  This bill is intended to deal only with  
            automobiles.  Other vehicles, such as motorcycles and  
            motorhomes, are excluded.

          4)Sunset.  The provisions of this bill sunset on January 1,  
            2020.








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          5)Immediate effect.  As a tax levy, this bill is effective  
            immediately.

          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   No


          According to the Senate Appropriations Committee, this bill's  
          revenue impact relative to current law is completely dependent  
          upon future taxpayer behavior, and is thus unknown. However,  
          based on historical experience, this bill could reduce annual  
          sales tax revenue by up to $25,000 annually ($12,000 General  
          Fund). Implementation costs to the Board of Equalization would  
          be minor and absorbable.




          SUPPORT:   (Verified1/25/16)


          Tesla


          OPPOSITION:   (Verified1/25/16)


          None received




          Prepared by:Randy Chinn / T. & H. / (916) 651-4121
          1/26/16 16:39:28


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