BILL ANALYSIS �
AB 1007
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Date of Hearing: May 27, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 1007 (Cook) - As Amended: May 24, 2011
Policy Committee: Revenue and
Taxation Vote: 8-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill provides an annual four-day sales tax holiday for
qualified back-to-school products sold to a qualified purchaser.
Specifically, this bill:
1)Provides that each year, beginning in 2012, the sales tax
holiday shall run from 12:01 a.m. on the first Friday in
August until midnight on the following Sunday and the
provisions will sunset by 2016.
2)Defines qualified back-to-school products as school supplies,
as specified, and that a qualified item's individual retail
price cannot exceed $100. Provides that, notwithstanding
existing law, the state shall not reimburse local agencies for
sales tax revenues lost as a result of the exemption.
3)Provides that this act is a tax levy within the meaning of the
State Constitution.
FISCAL EFFECT
The BOE estimates state and local revenue losses of $104.4
million annually.
COMMENTS
1)Purpose . The author states, "As schools slash their budgets,
parents have no choice but to pick up the slack. This sales
tax holiday will help preserve California's high educational
standards by helping parents buy the supplies their children
need for academic success." The proponents, the California
AB 1007
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Retailers Association, states, "The sales tax
disproportionately impacts low-income families because it
represents a higher percentage of their incomes. Conversely,
a tax holiday provides greater benefit to low-income persons."
2)Opposition . The California State Association of Counties
states that it takes issue with the Legislature unilaterally
using county revenues to do support this purchasing, pointing
out that county revenue sources have fallen dramatically,
leading to widespread layoffs and deep cuts to services.
They also note that for the Legislature to spend money that
would otherwise flow into counties' general funds at a time
like this seems ill-considered at best. If favoring these
particular products is an issue of statewide concern, as
passing this bill would indicate, then the state should be
willing to use statewide revenues to reimburse counties for
their losses, as has long been provided by Section 2230 of the
California Revenue and Taxation Code.
3)Related legislation.
a) AB 548 (Garcia), of the 2005-06 Legislative Session,
would have provided a sales tax holiday for specified
back-to-school products. AB 548 was held in Assembly
Revenue and Taxation Committee.
b) AB 1185 (Mountjoy), of the 2001-02 Legislative Session,
would have provided a partial sales tax exemption for
clothing or footwear sold during a specified annual period.
AB 1185 was held in Assembly Revenue and Taxation
Committee.
c) AB 944 (Cardenas), of the 1999-2000 Legislative Session,
would have established a three-day sales tax holiday for
specified articles of clothing and footwear purchased for
$100 or less. AB 944 was never held in the Senate
Committee on Revenue and Taxation.
d) AB 1320 (Ashburn), of the 1999-2000 Legislative Session,
would have provided a one-week sales tax holiday for any
item of TPP purchased for less than $500. AB 1320 failed
passage in Assembly Revenue and Taxation Committee.
AB 1007
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Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081