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AB-274 Sales and use taxes: exemption: food products.(2017-2018)

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Date Published: 05/01/2017 09:00 PM
AB274:v97#DOCUMENT

Amended  IN  Assembly  May 01, 2017
Amended  IN  Assembly  March 21, 2017

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill
No. 274

Introduced by Assembly Member Cristina Garcia

February 01, 2017

An act to add Section 6359.05 to the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.


LEGISLATIVE COUNSEL'S DIGEST


AB 274, as amended, Cristina Garcia. Sales and use taxes: exemption: food products.
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. These laws provide various exemptions from these taxes, including an exemption for food products, which, pursuant to Proposition 163, approved by the voters on November 3, 1992, are required to include, among other items, candy, confectionery, and snack foods.
Assembly Constitutional Amendment 2 of the 2017–18 Regular Session, if approved by the voters, on and after April 1, 2019, a specified date, would instead require that any sales or use taxes levied by the state or any of its political subdivisions apply to the sale of, or the storage, use, or other consumption in this state of, certain food products for human consumption, which include candy, confectionery, and snack foods. Assembly Constitutional Amendment 2, if approved by the voters, would authorize the Legislature to exempt the sale of, or the storage, use, or other consumption in this state of, any food product from sales and use taxes by a statute that becomes operative on or after November 7, 2018.
This bill, on and after April July 1, 2019, would exempt from those taxes the gross receipts from the sale of, and the storage, use, or other consumption in this state of those certain, food products for human consumption subject to those taxes pursuant to Assembly Constitutional Amendment 2 of the 2017–18 Regular Session, except for food products that are candy, candy or confectionery, as defined, or processed snacks, as defined.
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 laws authorize districts, as specified, to impose transactions and use taxes in accordance with the Transactions and Use Tax Law, which generally conforms to the Sales and Use Tax Law. Amendments to the Sales and Use Tax Law are automatically incorporated into the local tax laws.
Existing law requires the state to reimburse counties and cities for revenue losses caused by the enactment of sales and use tax exemptions.
This bill would provide that, notwithstanding these provisions, no appropriation is made and the state shall not reimburse any local agencies for sales and use tax revenues lost by them pursuant to this bill.
This bill would take effect immediately as a tax levy, but would become operative on November 7, 2018, only if Assembly Constitutional Amendment 2 of the 2017–18 Regular Session is submitted to, and approved by, the voters.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

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


SECTION 1.

 Section 6359.05 is added to the Revenue and Taxation Code, to read:

6359.05.
 (a) On and after April July 1, 2019, there are exempted from the taxes imposed by this part the gross receipts from the sale of, and the storage, use, or other consumption in this state of, food products for human consumption subject to the taxes imposed by this part pursuant to subdivision (b) of Section 34 of Article XIII of the California Constitution.
(b) Subdivision (a) shall not apply to food products that are candy. For candy or confectionery or processed snacks.
(c) For purposes of this subdivision, “candy” means a preparation of sugar, honey, or other natural or artificial ingredients or flavorings in the form of bars, drops, or pieces. “Candy” shall not include any preparation that contains flour or requires refrigeration. section, the following definitions apply:
(1) (A) Except as otherwise provided in subparagraph (B), “candy or confectionery” means all of the following, regardless of whether sold as an ingredient:
(i) Food products with sugar, honey, chocolate, corn syrup, or sugar substitute as the first listed ingredient.
(ii) Food products that are sugared, candied, or covered or coated in caramel, chocolate, honey, sprinkles, or other similar coatings.
(iii) Food products that are labeled or marketed as “candy” or “confectionery.”
(iv) Granola, trail mix, or other mixes that contain food products described in clauses (i) to (iii), inclusive.
(B) “Candy or confectionery” does not include any of the following:
(i) Cereal, cereal bars, protein bars, or meal replacement bars.
(ii) Jams, jellies, or other preserves.
(iii) Maple sugar products, unless labeled or marketed as “candy” or “confectionery.”
(iv) Baked goods.
(v) Food products that require refrigeration.
(vi) Beverages.
(vii) Fruit, unless covered or coated in caramel, chocolate, honey, sprinkles, or other similar coatings.
(2) “Healthy choice snack” means a food product that meets all of the following requirements:
(A) Contains not more than 200 calories per serving.
(B) Not more than 35 percent of its total calories are from fat per serving.
(C) Less than 10 percent of its total calories are from saturated fat per serving.
(D) Not more than 35 percent of its total weight shall be composed of sugar per serving.
(E) Contains no trans fat.
(F) Contains not more than 200 milligrams of sodium per serving.
(3) “Processed snack” means a food product that is ready for consumption without further preparation, not including toasting. “Processed snack” does not include healthy choice snacks, frozen products, fresh or dried fruit or vegetables, unless the fruit or vegetables contain added sugar, dairy products, dairy substitutes, nuts and seeds, nut butters, canned products, bread products, meat products, meat substitutes, prepared food, or beverages.

SEC. 2.

 Notwithstanding Section 2230 of the Revenue and Taxation Code, no appropriation is made by this act and the state shall not reimburse any local agency for any sales and use tax revenues lost by it under this act.

SEC. 3.

 This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect. However, the provisions of this act shall become operative only if Assembly Constitutional Amendment 2 of the 2017–18 Regular Session is submitted to, and approved by, the voters of California pursuant to subdivision (c) of Section 10 of Article II of the California Constitution, and in that event shall become operative on November 7, 2018.