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AB-479 Sales and use taxes: exemption: menstrual and incontinence products: alcoholic beverage taxes: distilled spirits: additional surtax.(2017-2018)

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Date Published: 03/28/2017 04:00 AM
AB479:v98#DOCUMENT

Amended  IN  Assembly  March 27, 2017

CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill No. 479


Introduced by Assembly Member Gonzalez Fletcher Members Gonzalez Fletcher and Cristina Garcia

February 13, 2017


An act to amend Section 6369 of 32220 of, and to add Sections 6369.8 and 32221.5 to, the Revenue and Taxation Code, relating to taxation. taxation, to take effect immediately, tax levy.


LEGISLATIVE COUNSEL'S DIGEST


AB 479, as amended, Gonzalez Fletcher Gonzalez Fletcher. Sales and use tax: exemption: medicines. Sales and use taxes: exemption: menstrual and incontinence products: alcoholic beverage taxes: distilled spirits: additional surtax.

Existing

(1) Existing sales and use tax laws imposes impose a tax on retailers measured by the gross receipts from the sale of tangible personal property sold at retail in this state of, state, or on the storage, use, or other consumption in this state of, of tangible personal property purchased from a retailer for storage, use, or other consumption in this state. The Sales and Use Tax Law provides various exemptions from those taxes, including an exemption for the sale of, or the storage, use, or consumption of, medicines.

This bill would make a nonsubstantive change to those provisions.

This bill, beginning January 1, 2018, would exempt from those taxes the gross receipts from the sale in this state of, and the storage, use, or other consumption in this state of, wearable incontinence supplies designed, manufactured, processed, fabricated, or package for use by infants, children, or adults, and of tampons, sanitary napkins, menstrual sponges, and menstrual cups.
The Bradley-Burns Uniform Local Sales and Use Tax Law authorizes cities and counties 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 cities and counties 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 cities and counties for sales and use tax revenues lost by them pursuant to this bill.
(2) The Alcoholic Beverage Tax Law imposes an excise tax, at specified rates, for the privilege of selling or possessing for sale beer, wine, sparkling wine, sparkling cider, and distilled spirits. The proceeds from the excise tax are deposited in the Alcohol Beverage Control Fund for transfer to the General Fund. The Alcoholic Beverage Tax Law also imposes a surtax, at specified rates, for the privilege of selling or possessing for sale, beer, wine, sparkling cider, and distilled spirits. The proceeds from the surtax are deposited into the General Fund.
This bill, beginning on January 1, 2018, would impose an additional surtax, and a related floor stock tax, on distilled spirits at specified rates.
By imposing an additional surtax on distilled spirits, this bill would include a change in state statute that would result in a taxpayer paying a higher tax within the meaning of Section 3 of Article XIII A of the California Constitution, and thus would require for passage the approval of 2/3 of the membership of each house of the Legislature.
This bill would take effect immediately as a tax levy.
Vote: MAJORITY2/3   Appropriation: NO   Fiscal Committee: NOYES   Local Program: NO  

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


SECTION 1.

 Section 6369.8 is added to the Revenue and Taxation Code, to read:

6369.8.
 On and after January 1, 2018, there are exempted from the taxes imposed by this part the gross receipts from the sale in this state of, and the storage, use, or other consumption in this state of all of the following:
(a) Wearable incontinence supplies designed, manufactured, processed, fabricated, or packages for use by infants, children, or adults.
(b) Tampons, sanitary napkins, menstrual sponges, and menstrual cups.

SEC. 2.

 Section 32220 of the Revenue and Taxation Code is amended to read:

32220.
 On and after July 15, 1991, an excise surtax is hereby imposed upon all beer and wine sold in this state by a manufacturer, winegrower, or importer, and upon all distilled spirits sold in this state by a manufacturer, distilled spirits manufacturer’s agent, brandy manufacturer, winegrower, importer, rectifier, wholesaler, common carrier with respect to distilled spirits sales made upon boats, trains, and airplanes, or persons licensed to sell distilled spirits upon boats, trains, and airplanes, and upon sellers of beer, wine, or distilled spirits with respect to which no tax has been paid within areas over which the United States government exercises jurisdiction, at the following rates:
(a) On all beer, sixteen cents ($0.16) per gallon and at a proportionate rate for any other quantity.
(b) On all still wines containing not more than 14 percent of absolute alcohol by volume, nineteen cents ($0.19) per wine gallon and at a proportionate rate for any other quantity.
(c) On all still wines containing more than 14 percent of absolute alcohol by volume, eighteen cents ($0.18) per wine gallon and at a proportionate rate for any other quantity.
(d) On sparkling hard cider, eighteen cents ($0. 18) per wine gallon and at a proportionate rate for any other quantity.
(e) (1) On all distilled spirits of proof strength or less, one dollar and thirty cents ($1.30) per wine gallon and at a proportionate rate for any other quantity.
(2) On and after January 1, 2018, at 2:01 a.m., on all distilled spirits of proof strength or less, an additional excise surtax of one dollar and twenty cents ($1.20) per wine gallon and at a proportionate rate for any other quantity.
(f) (1) On all distilled spirits in excess of proof strength, two dollars and sixty cents ($2.60) per wine gallon and at a proportionate rate for any other quantity.
(2) On and after January 1, 2018, at 2:01 a.m., on all distilled spirits in excess of proof strength, an additional excise surtax of two dollars and forty cents ($2.40) per wine gallon and at a proportionate rate for any other quantity.

SEC. 3.

 Section 32221.5 is added to the Revenue and Taxation Code, to read:

32221.5.
 Except with respect to distilled spirits in the possession of a distilled spirits manufacturer, distilled spirits manufacturer’s agent, brandy manufacturer, rectifier, wholesaler, or common carrier licensed to sell distilled spirits on board boats, trains, and airplanes, floor stock taxes are hereby imposed in amounts equal to the surtaxes imposed by paragraph (2) of subdivision (e) and paragraph (2) of subdivision (f) of Section 32220 upon all alcoholic beverages upon which those surtaxes have not been paid, that are in the possession or under the control of every person licensed under Division 9 (commencing with Section 23000) of the Business and Professions Code at 2:01 a.m. on January 1, 2018. On or before February 15, 2018, each person subject to the tax imposed by this section shall prepare and file with the State Board of Equalization, on a form prescribed by the board, a return showing the amount of units of distilled spirits possessed by him or her at 2:01 a.m. on January 1, 2018, that are subject to the tax imposed by this section, and any other information the board deems necessary for the proper administration of this chapter. The taxpayer shall deliver the return, together with a remittance of the amount of tax due, to the office of the board on or before February 15, 2018.

SEC. 4.

 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. 5.

 This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect.
SECTION 1.Section 6369 of the Revenue and Taxation Code is amended to read:
6369.

(a)There are exempted from the taxes imposed by this part the gross receipts from the sale in this state of, and the storage, use, or other consumption in this state of, medicines:

(1)Prescribed for the treatment of a human being by a person authorized to prescribe the medicines, and dispensed on prescription filled by a registered pharmacist in accordance with law.

(2)Furnished by a licensed physician and surgeon, dentist, or podiatrist to his or her own patient for treatment of the patient.

(3)Furnished by a health facility for treatment of any person pursuant to the order of a licensed physician and surgeon, dentist, or podiatrist.

(4)Sold to a licensed physician and surgeon, podiatrist, dentist, or health facility for the treatment of a human being.

(5)Sold to this state or any political subdivision or municipal corporation thereof, for use in the treatment of a human being; or furnished for the treatment of a human being by a medical facility or clinic maintained by this state or any political subdivision or municipal corporation thereof.

(6)Furnished without charge by a pharmaceutical manufacturer or distributor to a licensed physician, surgeon, dentist, podiatrist, or health facility for the treatment of a human being, or furnished by a pharmaceutical manufacturer or distributor without charge to an institution of higher education for instruction or research, provided that the exemption provided in this paragraph is limited to medicines of a type that can be dispensed only (A) for the treatment of a human being and (B) pursuant to prescriptions issued by persons authorized to prescribe medicines. The exemption provided in this paragraph shall include the materials used to package, and the constituent elements and ingredients used to produce, the medicines described in this paragraph and is intended to preclude any imposition of tax pursuant to Section 6094 or 6095 with respect to those materials, elements, and ingredients.

(b)“Medicines” as used in this section, means any substance or preparation intended for use by external or internal application to the human body in the diagnosis, cure, mitigation, treatment, or prevention of disease and commonly recognized as a substance or preparation intended for that use. However, “medicines” does not include any of the following:

(1)Any auditory, prosthetic, ophthalmic, or ocular device or appliance.

(2)Articles that are in the nature of splints, bandages, pads, compresses, supports, dressings, instruments, apparatus, contrivances, appliances, devices, or other mechanical, electronic, optical, or physical equipment or article or the component parts and accessories thereof.

(3)Any alcoholic beverage the manufacture, sale, purchase, possession, or transportation of which is licensed and regulated by the Alcoholic Beverage Control Act (Division 9 (commencing with Section 23000) of the Business and Professions Code).

(c)Notwithstanding subdivision (b), “medicines” as used in this section means and includes any of the following:

(1)Sutures, whether or not permanently implanted.

(2)Bone screws, bone pins, pacemakers, and other articles, other than dentures, permanently implanted in the human body to assist the functioning of any natural organ, artery, vein, or limb and that remain or dissolve in the body.

(3)(A)Orthotic devices, other than orthodontic devices, designed to be worn on the person of the user as a brace, support, or correction for the body structure, and replacement parts for these devices. However, orthopedic shoes and supportive devices for the foot are not exempt unless they are custom-made biomechanical foot orthoses or are an integral part of a leg brace or artificial leg.

(B)For purposes of this paragraph, “custom-made biomechanical foot orthoses” means an individually prescribed foot orthosis which is custom fabricated over a neutral or near neutral subtalar joint with a pronated midtarsal joint position positive plaster model of the patient’s foot, which model, when the cast is modified to support the osseous position of the forefoot in relationship to the rearfoot, embodies the angular osseous relationships of the anterior and posterior portions of the foot.

(4)Prosthetic devices, and replacement parts for those devices, designed to be worn on or in the person of the user to replace or assist the functioning of a natural part of the human body, other than auditory, ophthalmic, and ocular devices or appliances, and other than dentures, removable or fixed bridges, crowns, caps, inlays, artificial teeth, and other dental prosthetic materials and devices.

(5)Artificial limbs and eyes, or their replacement parts, for human beings.

(6)Programmable drug infusion devices to be worn on or implanted in the human body.

(d)“Health facility” as used in this section has the meaning ascribed to it in Section 1250 of the Health and Safety Code, and also includes any “clinic” as defined in Section 1200 of the Health and Safety Code.

(e)Insulin and insulin syringes furnished by a registered pharmacist to a person for treatment of diabetes as directed by a physician shall be deemed to be dispensed on prescription within the meaning of this section.

(f)Orthotic and prosthetic devices, and replacement parts for these devices, furnished pursuant to the written order of a physician or podiatrist, shall be deemed to be dispensed on prescription within the meaning of paragraph (1) of subdivision (a), whether or not the devices are furnished by a registered pharmacist.

(g)Mammary prostheses, and any appliances and related supplies necessary as the result of any surgical procedure by which an artificial opening is created in the human body for the elimination of natural waste, shall be deemed to be dispensed on prescription within the meaning of this section.