BILL ANALYSIS
AB 1981
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Date of Hearing: April 19, 2010
ASSEMBLY COMMITTEE ON NATURAL RESOURCES
Wesley Chesbro, Chair
AB 1981 (Hill) - As Amended: April 12, 2010
SUBJECT : Recycling: waste tires: fees.
SUMMARY : Exempts new car dealers (dealers) from collecting the
California tire fee for each new tire sold with a new or used
vehicle, and instead allows dealers to collect a "vehicle tire
fee" only on new vehicles sold.
EXISTING LAW , pursuant to the California Tire Recycling Act
(Act), requires retail sellers of new tires to collect a fee of
$1.75 per tire, of which $1.00 is deposited into the Tire
Recycling Management Fund (Fund) to promote recycling and other
alternatives to landfill disposal and stockpiling of waste
tires, and $0.75 is deposited in the Air Pollution Control Fund
(APCF) for the mitigation of remediation of air pollution caused
by the decomposition of tires. Beginning January 1, 2015,
reduces the fee to $1.00 to be deposited into the Fund.
THIS BILL :
1)Exempts new tires sold with a new or used motor vehicle that
is sold by a dealer from the definition of a new tire for
purposes of the Act and thereby exempts dealers from
collecting the tire fee for these tires.
2)Requires dealers to collect a "vehicle tire fee" of $9.50 for
every new vehicle sold before January 1, 2015 and reduces the
fee to $5.00 on and after that date. Exempts used vehicles
sold by dealers from this fee.
3)Specifies that the vehicle tire fee be listed separately from
the tire fee on the conditional sale or lease agreement.
4)Specifies that $5.41 of the vehicle tire fee be deposited into
the Fund and $4.09 of the vehicle tire fee be deposited into
the APCF until December 31, 2014.
5)Makes conforming changes to the Automobile Sales Finance Act.
AB 1981
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FISCAL EFFECT : Unknown
COMMENTS : According to the New Car Dealers Association, the
sponsor of this bill, "collection of the existing tire fee has
proved difficult for dealers? especially since this is the only
fee collected from a customer that is not charged on a per
vehicle basis. Since only new tires are subject to the fee,
dealers must determine whether a new vehicle has a spare tire or
dual rear tires, and, on used vehicles, whether any new tires
were installed on the vehicle prior to sale. Dealers have
difficulty in keeping track of the number of new tires mounted
on vehicles sold and charging customers accordingly, thereby
subjecting dealers to liability and audit costs."
Instead of charging a per tire fee, this bill allows dealers to
charge a per vehicle tire fee on new vehicles sold, and exempts
used vehicles from any tire fee. The author indicates that this
bill is intended to be revenue neutral; however, is extremely
difficult to establish the appropriate level of the fee on new
vehicles to offset any income lost by exempting used vehicles
under this bill. The ratio of new to used vehicles sales
changes constantly. When the economy slows, new vehicle sales
decrease substantially and customers are more likely to purchase
less expensive used vehicles. If this bill passes out of this
committee, the author should work with the Appropriations
Committee to insure that the fee on new vehicles is adequate to
maintain the Fund.
The committee may wish to adopt a technical amendment to strike
out "Until December 31, 2014" on page 18, line 30. The entire
section is already scheduled to sunset on that date.
REGISTERED SUPPORT / OPPOSITION :
Support
California New Car Dealers Association (sponsor)
Opposition
California Tire Dealers Association
Rubber Manufacturer's Association
Analysis Prepared by : Elizabeth MacMillan / NAT. RES. / (916)
AB 1981
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319-2092