Amended in Senate May 4, 2016

Amended in Senate April 4, 2016

Senate BillNo. 1338


Introduced by Senator Lara

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(Coauthors: Senators Beall, Hernandez, Hertzberg, and Pavley)

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February 19, 2016


An act to add Section 6377.5 to the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.

LEGISLATIVE COUNSEL’S DIGEST

SB 1338, as amended, Lara. Sales and use taxes: exemption: zero-emission and near-zero-emission equipment.

Existing sales and use tax laws impose a tax on retailers measured by the gross receipts from the sale of tangible personal property sold at retail in this state, or on the storage, use, or other consumption in this state of tangible personal property purchased from a retailer for storage, use, or other consumption in this state, and provides various exemptions from those taxes.

The bill would exempt from those taxes, on and after January 1, 2017, and before January 1, 2030, the gross receipts from the sale of, and the storage, use, or other consumption of, qualified tangible personal property purchased by a qualified person, as defined, for use primarily in, at, or on a marine terminal or qualified tangible personal property used primarily to maintain, repair, or test the above-described equipment, as provided. The bill would require the purchaser to furnish the retailer with an exemption certificate, as specified.

The Bradley-Burns Uniform Local Sales and Use Tax Law authorizes counties and cities to impose local sales and use taxes in conformity with the Sales and Use Tax Law, and existing law authorizes districts, as specified, to impose transactions and use taxes in conformity with the Transactions and Use Tax Law, which conforms to the Sales and Use Tax Law. Exemptions from state sales and use taxes are incorporated into these laws.

This bill would specify that this exemption does not apply to local sales and use taxes, transactions and use taxes, and specified state taxes from which revenues are deposited into the Local Public Safety Fund, the Education Protection Account, the Local Revenue Fund, or the Local Revenue Fund 2011.

This bill would take effect immediately as a tax levy.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

P2    1

SECTION 1.  

(a) The Legislature finds and declares:

2(1) California’s complex freight transportation system is
3responsible for one-third of the state’s economy and jobs, with
4freight-dependent industries accounting for over $700 billion in
5revenue and over 5 million jobs in 2013, and is home to the largest
6gateway for international trade and domestic commerce in the
7nation, with an interconnected system of ports, railroads, highways,
8and roads that allow goods from around the world to move
9throughout the state.

10(2) Significant investments in freight infrastructure are necessary
11to ensure the continued economic competitiveness of our state’s
12seaports and to deploy zero-emission and near-zero-emission
13equipment. There are additional expenses that accompany
14investment in the next generation of zero-emission and
15near-zero-emission equipment and supporting infrastructure at
16marine terminals in California’s public ports.

17(3) The primary purpose of this act is to encourage the
18development and growth of investment in, and subsequent
19increased use of, California’s public port facilities and the
20introduction of zero-emission and near-zero-emission equipment
21and supporting infrastructure at California’s public port facilities.

22(4) This legislation is necessary to further incentivize the earliest
23possible investment in and adoption of zero-emission and
24near-zero-emission technology at California’s public seaports.
25Companies should be encouraged to take on the additional costs
P3    1of purchasing and maintaining zero-emission equipment and
2supporting infrastructure in partnership with the state to achieve
3the state’s emission reduction goals by reducing those state taxes
4which would increase the ultimate cost of these new equipment
5and infrastructure investments.

6(b) It is the intent of the Legislature to incentivize the earliest
7possible adoption of zero-emissions technology at California’s
8public seaports and to eliminate taxes imposed on the purchase of
9that equipment that further increase the costs of purchasing and
10maintaining zero-emission equipment and supporting infrastructure,
11which are already of significantly greater expense than
12conventional equipment and infrastructure.

13

SEC. 2.  

Section 6377.5 is added to the Revenue and Taxation
14Code
, to read:

15

6377.5.  

(a) On or after January 1, 2017, and before January
161, 2030, there are exempted from the taxes imposed by this part
17the gross receipts from the sale of, and the storage, use, or other
18consumption in this state of, any of the following:

19(1) Qualified tangible personal property purchased for use by
20a qualified person to be used primarily in, at, or on a marine
21terminal of a California public port for carriage, handling, or
22movement of freight, cargo, and goods.

23(2) Qualified tangible personal property purchased for use by
24a qualified person to be used primarily to maintain, repair, measure,
25or test any qualified tangible personal property described in
26paragraph (1).

27(b) For purposes of this section:

28(1) “Primarily” means 50 percent or more of the time.

29(2) “Qualified person” means a person that is a stevedore, marine
30terminal operator, operator of abegin delete portend deletebegin insert port, rail ramp, rail yard,
31intermodal facility,end insert
or freight yard, or any other person that is
32engaged in cargo and freight loading, delivery, movement, storage,
33and conveyance at or within a California public seaport.

34(3) “Qualified tangible personal property” includes both of the
35following:

36(A) All zero-emission or near-zero-emission equipment used
37in conjunction with the movement of goods or freight, including,
38but not limited to, computers, data-processing equipment, and
39computer software, required to operate, control, regulate, or
40maintain the zero-emission or near-zero-emission equipment,
P4    1together with all repair and replacement parts with a useful life of
2one or more years therefor, whether purchased separately or in
3conjunction with the equipment and regardless of whether the
4machine or component parts are assembled by the qualified person
5or another party.

6(B) Special purpose buildings and foundations used as an
7integral part of the process of utilization of zero-emission
8equipment or near-zero-emission equipment constitute qualified
9tangible personal property to the extent that the sale of, or storage,
10use, or other consumption is subject to the imposition of sales or
11use tax.

12(4) “Zero-emission or near-zero-emission equipment” means
13equipment,begin insert off-roadend insert vehicles, and related technologies usedbegin delete at aend delete
14begin insert within the boundaries of aend insert California public seaport that reduce
15or eliminate greenhouse gas emissions and improve air quality
16when compared with conventional or fully commercialized
17alternatives, as identified by the State Air Resources Board in
18consultation with the State Energy Resources Conservation and
19Development Commission. “Zero-emission and near-zero-emission
20equipment” may include, but is not limited to, enabling
21technologies that provide a pathway to emission reductions,
22advanced or alternative fuel engines, and hybrid or alternative fuel
23technologies for seaport equipment.

24(c) An exemption shall not be allowed under this section unless
25the purchaser furnishes the retailer with an exemption certificate,
26completed in accordance with any instructions or regulations as
27the board may prescribe, and the retailer retains the exemption
28certificate in its records and furnishes it to the board upon request.

29(d) (1) Notwithstanding the Bradley-Burns Uniform Local Sales
30and Use Tax Law (Part 1.5 (commencing with Section 7200)) and
31the Transactions and Use Tax Law (Part 1.6 (commencing with
32Section 7251)), the exemption established by this section shall not
33apply with respect to any tax levied by a county, city, or district
34pursuant to, or in accordance with, either of those laws.

35(2) Notwithstanding subdivision (a), the exemption established
36by this section shall not apply with respect to any tax levied
37pursuant to Section 6051.2 or 6201.2, pursuant to Sections 35 and
3836 of Article XIII of the California Constitution, or any tax levied
39pursuant to Sections 6051 or 6201 that is deposited in the State
P5    1Treasury to the credit of the Local Revenue Fund 2011 pursuant
2to Sections 6051.15 or 6201.15.

3(e) Notwithstanding subdivision (a), the exemption provided
4by this section shall not apply to any sale or storage, use, or other
5consumption of property that, within one year from the date of
6purchase, is removed from California, converted from an exempt
7use under subdivision (a) to some other use not qualifying for
8exemption, or otherwise used in a manner not qualifying for
9exemption.

10(f) This section shall apply to leases of qualified tangible
11personal property classified as “continuing sales” and “continuing
12purchases” in accordance with Sections 6006.1 and 6010.1. The
13exemption established by this section shall apply to the rentals
14payable pursuant to the lease, provided the lessee is a qualified
15person and the tangible personal property is qualified tangible
16personal property used in an activity described in subdivision (a).

17(g) (1) Upon the effective date of this section, the Department
18of Finance shall estimate the total dollar amount of exemptions
19that will be taken for each calendar year, or any portion thereof,
20for which this section provides an exemption.

21(2) No later than each March 1 next following a calendar year
22for which this section provides an exemption, the board shall
23provide to the Joint Legislative Budget Committee a report of the
24total dollar amount of exemptions taken under this section for the
25immediately preceding calendar year. The report shall compare
26the total dollar amount of exemptions taken under this section for
27that calendar year with the department’s estimate for that same
28calendar year. If that total dollar amount taken is less than the
29estimate for that calendar year, the report shall identify options for
30increasing exemptions taken so as to meet estimated amounts.

31

SEC. 3.  

This act provides for a tax levy within the meaning of
32Article IV of thebegin insert Californiaend insert Constitution and shall go into
33immediate effect.


CORRECTIONS:

Text--Page 3.




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Corrected 5-19-16—See last page.     97