BILL ANALYSIS �
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THIRD READING
Bill No: SB 983
Author: Hernandez (D)
Amended: As introduced
Vote: 21
SENATE GOVERNANCE & FINANCE COMMITTEE : 4-2, 4/30/14
AYES: Wolk, DeSaulnier, Hernandez, Liu
NOES: Knight, Walters
NO VOTE RECORDED: Beall
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SUBJECT : Local sales taxes: card lock fuel: place of sale
SOURCE : City of South El Monte
DIGEST : This bill specifies that, for purposes of allocating
the local tax on sales of fuel made through a card lock network,
the place at which the fuel is delivered is the point of sale.
ANALYSIS : Existing law authorizes counties, under the
Bradley-Burns law, to impose a local sales and use tax of up to
1% on tangible personal property sold at retail in the county,
or purchased outside the county for use in the county. All
cities and counties within California have adopted ordinances
under the terms of the Bradley-Burns Law and levy the 1% local
tax. Cities can impose a sales and use tax rate of up to 1%,
credited against the county rate so that the combined rate does
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not exceed 1%. The State Board of Equalization (BOE)
administers these taxes. Of the 1% tax, 0.75% is used to
support general operations and the remaining 0.25% is designated
by statute for county transportation purposes.
Bradley-Burns law specifies the "place of sale" for purposes of
the local sales tax. In general, all retail sales in California
are consummated at the place of business of the retailer. If a
retailer has only one place of business in California, the local
sales tax derived from sales consummated at that place of
business is transmitted to the city, county, or city and county
in which the retailer's place of business is located. If a
retailer has more than one place of business in the state, BOE
regulation specifies that the sale occurs at the place of
business where the principal negotiations are carried on.
This bill specifies that, for purposes of allocating the local
tax on sales of fuel made through a card lock network, the place
at which the fuel is delivered is the point of sale.
This bill defines "card lock system" as a system where owners of
unattended card lock fueling stations form a network whereby
customers may purchase fuel at any of the network's
participating fueling stations by use of a card issued to the
customer, and where prices are not posted at the pump and no
receipt is given at the time of delivery.
Background
Out of state retailers that negotiate sales outside of
California, allocate the local tax in one of two ways. If the
out of state retailer is engaged in business in this state, the
local tax is allocated to the location of the retailer's
in-state location. If the out of state retailer is not engaged
in business in this state, the local tax is allocated to the
location of the headquarters of the California based business
the retailer has contracted with.
A card lock network fuel system is comprised of self-service
fuel stations and at least one sales office. The card lock
network contracts with commercial, industrial, and governmental
fleets to provide fuel at both stations owned by the card lock
system and affiliate stations not owned by card lock network.
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Customers are issued cards which allow them to receive fuel at
any of the fuel stations owned by the card lock network or
affiliated with the card lock system. The contracts are
negotiated between the customer and the card lock network prior
to the delivery of the fuel. At card lock fueling stations,
fuel prices are generally not posted at the pump, and if prices
are posted, they do not apply to the sale of fuel to card lock
customers.
Prior legislation . AB 451 (Yee, Chapter 391, Statutes of 2005)
designated that the point of sale of jet fuel is the point of
delivery of that jet fuel to the aircraft.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 5/14/14)
City of South El Monte (source)
Cities of Atascadero, Azusa, Baldwin Park, Carson, Downey, El
Monte, Huntington Park, Industry, Irwindale, La Mirada, La
Puente, Rancho Cucamonga, Rosemead, Upland, and Vacaville
ARGUMENTS IN SUPPORT : Supporters state:
The allocation of the Bradley Burns portion of sales and use
tax revenue from these transactions pose a problem for local
governments with these fueling stations in their jurisdiction
because there are a significant number of negative secondary
effects associated with their utilization. The vehicles that
utilize these stations are generally semi-trucks, which are
heavy in weight, therefore causing substantial wear and tear
to city streets as well as traffic congestion and reduced air
quality.
Vehicles are fueling up in over 1,000 locations in cities
throughout the state, but approximately only 30 cities are
receiving any of the estimated $137 million in statewide
Bradley Burns' portion of tax revenue generated from these
transactions. These revenues would be better suited to help
cities where fueling takes place to offset pollution and
deterioration to their infrastructure.
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AB:k 5/14/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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