BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 680| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- 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. SB 680 Page 2 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. SB 680 Page 3 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 **** END **** SB 680 Page 4