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AB-405 Sales and use taxes: exemption: water treatment.(2019-2020)



Current Version: 04/25/19 - Amended Assembly         Compare Versions information image


AB405:v98#DOCUMENT

Amended  IN  Assembly  April 25, 2019

CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill
No. 405


Introduced by Assembly Member Blanca Rubio

February 07, 2019


An act to amend Section 6353 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.


LEGISLATIVE COUNSEL'S DIGEST


AB 405, as amended, Blanca Rubio. Sales and use taxes: exemption: water treatment.

The Sales and Use Tax Law imposes

Existing sales and use tax laws impose a tax on retailers measured by the gross receipts from the sale in this state of, or the storage, use, or other consumption in this state of, tangible personal property. The law Sales and Use Tax Law provides various exemptions from that tax, including an exemption for the sale of, or the storage, use, or consumption of, gas, electricity, and water when delivered to consumers, as specified.
This bill bill, on and after January 1, 2020, and before January 1, 2025, would exempt from that tax the gross receipts from the sale in this state of, and the storage, use, or other consumption in this state of, chemicals used by a city, county, public utility, and sanitation district to treat water, recycled water, or wastewater regardless of whether those chemicals or other agents become a component part thereof and regardless of whether the treatment takes place before or after the delivery to consumers.
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 Section 2230 of the Revenue and Taxation Code, 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.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

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


SECTION 1.

 Section 6353 of the Revenue and Taxation Code is amended to read:

6353.
 There are exempted from the taxes imposed by this part the gross receipts derived from the sales, furnishing, or service of and the storage, use, or other consumption in this state of, all of the following:
(a) Gas, electricity, and water, including steam and geothermal steam, brines, and heat, when delivered to consumers through mains, lines, or pipes. This exemption includes chemicals and other agents used by a city, county, public utility, and sanitation district to treat water, recycled water, or wastewater, regardless of whether the chemicals and other agents become a component part thereof, and regardless of whether the treatment takes place before or after the delivery to consumers.
(b) (1) Liquefied petroleum gas, delivered to a qualified residence by the seller, that is sold for household use in the qualified residence, or liquefied petroleum gas that is purchased for use by a qualified person to be used in producing and harvesting agricultural products; provided, in either case, the liquefied petroleum gas is delivered into a tank with a storage capacity for liquefied petroleum gas that is equal to or greater than 30 gallons. This subdivision may not be construed to provide any exemption from any tax levied by a city, county, or city and county pursuant to Section 7284.3, or any successor to that section.
(2) For purposes of this subdivision:
(A) “Qualified residence” means a primary residence, not serviced by gas mains and pipes.
(B) “Qualified person” means any person engaged in a line of business described in Codes 0111 to 0291, inclusive, of the Standard Industrial Classification Manual published by the United States Office of Management and Budget, 1987 Edition, and any other person that assists that person in the lines of business described in this paragraph in producing and harvesting agricultural products.
(c) Water, when sold to an individual in bulk quantities of 50 gallons or more, for general household use in the individual’s residence if the residence is located in an area not serviced by mains, lines, or pipes.
(d) Exhaust steam, waste steam, heat, or resultant energy, produced in connection with cogeneration technology, as defined in Section 25134 of the Public Resources Code.
(e) The exemptions provided by subdivision (b) shall be effective starting September 1, 2001.
(f) The amendments made by the act adding this subdivision shall be operative on the effective date of the act adding this subdivision. and after January 1, 2020, and before January 1, 2025.

SEC. 2.

 (a) It is the intent of the Legislature to apply the requirements of Section 41 of the Revenue and Taxation Code to this act. In this connection, the Legislature finds and declares all of the following:
(1) The goal of this act in amending Section 6353 to the Revenue and Taxation Code is to encourage water reuse and to promote water recycling and related technologies by lowering the economic costs of water reuse through a modest sales tax exemption for the sale of chemicals and other agents used by a city, county, public utility, of sanitation district to treat water, recycled water, or wastewater.
(2) The Legislature will measure the success of this act in meeting that goal by evaluating the overall increase in recycled water recovery in future years by cities, counties, public utilities, and sanitation districts, especially by those entities that have significant amounts of recycled water. In its evaluation, the Legislature should assign an inflationary or population factor and then look at recycled water recovery beyond that baseline and attribute that increase in recycled water recovery to the lower costs of recycled water due to the sales and use tax exemption provided by Section 6353 of the Revenue and Taxation Code, as amended by this act.
(3) The Legislature may also look into any increases in the cost of water as reported by the Public Utilities Commission or in available information from cities, counties, public utilities, and sanitation districts.
(b) To assist the Legislature in determining whether the sales and use tax exemption provided by Section 6353 of the Revenue and Taxation Code, as amended by this act, is meeting the goals specified in subdivision (a), beginning on or before March 1, 2021, and on or before March 1 every year thereafter until March 1, 2025, the California Department of Tax and Fee Administration shall calculate and report to the Legislature the aggregate amount of exemptions provided by Section 6353 of the Revenue and Taxation Code, as amended by this act, in the previous calendar year. Any report shall be submitted in compliance with Section 9795 of the Government Code.

SEC. 2.SEC. 3.

 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.SEC. 4.

 This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect.