BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 898 (Nguyen) - Sales and use taxes: exemption: animal blood
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|Version: April 25, 2016 |Policy Vote: GOV. & F. 7 - 0 |
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|Urgency: No |Mandate: No |
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|Hearing Date: May 2, 2016 |Consultant: Robert Ingenito |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: SB 898 would provide a sales and use tax (SUT)
exemption for the sale of animal blood.
Fiscal
Impact: The Board of Equalization (BOE) estimates that this bill
would result in an annual revenue loss of $158,000, $76,000 of
which would be General Fund. The remainder of the reduction
would impact local governments. Additionally, BOE indicates that
the bill would result in minor and absorbable implementation
costs.
Background: Except where a specific exemption or exclusion is provided,
current law imposes the SUT on all retailers for the privilege
of selling tangible personal property (TPP) at retail in
California, or on the storage, use, or other consumption in this
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state of TPP purchased from a retailer. Cities and Counties may
increase the SUT rate up to 2 percentage points for either
specific or general purposes with a vote of the people. As of
January 1, 2017, the average statewide SUT rate will be 8.21
percent.
The Legislature has exempted certain tangible goods from SUT,
including food, prescription medicine, household utilities,
manufacturing equipment, and a variety of goods related to
agriculture. Generally, purchases by nonprofits, public
agencies, and charities are subject to SUT, unless otherwise
exempted.
Current law exempts from SUT human whole blood, plasma, blood
products, blood derivatives, or any human body parts held in a
bank for medical purposes. This exemption does not apply to
animal blood and blood products.
Proposed Law:
This bill would provide for a SUT exemption for the sale of
animal blood, plasma, blood products, and blood derivatives,
sold for use in the cure, mitigation, treatment, or prevention
of injury or disease in animals. Additionally, the bill would
require BOE to cancel any current notice of determination and
any related penalties and interest, and preclude BOE from
issuing a new notice of determination.
Staff
Comments: The California Department of Food and Agriculture
indicates that only two animal blood bank establishments hold
licenses to produce, market, and sell animal blood and blood
products. These facilities provide whole blood, plasma,
platelets, and clotting factors to veterinary hospitals and
clinics. The blood used to make these products is collected from
one of the animal "blood donors" housed permanently or
semi-permanently at the blood bank. California law does not
allow pet owners to volunteer their animals as donors to these
commercial blood banks.
BOE assumes that state animal blood product sales total roughly
$2 billion annually. It also assumes the expiration of the
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temporary quarter-cent increase SUT approved by the voters in
2012 (Proposition 30).
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