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AB-365 Sales and use taxes: exemption: zero-emission and near-zero-emission drayage trucks.(2021-2022)



Current Version: 01/12/22 - Amended Assembly

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AB365:v97#DOCUMENT

Amended  IN  Assembly  January 12, 2022
Amended  IN  Assembly  January 03, 2022

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Assembly Bill
No. 365

Introduced by Assembly Member O’Donnell

February 01, 2021

An act to add and repeal Section 6356.1 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.


LEGISLATIVE COUNSEL'S DIGEST


AB 365, as amended, O’Donnell. Sales and use taxes: exemption: zero-emission and near-zero-emission drayage trucks.
Existing sales and use tax laws impose taxes on retailers measured by 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, measured by sales price. The Sales and Use Tax Law provides various exemptions from these taxes.
This bill would, on and after January 1, 2023, and before January 1, 2028, exempt from those taxes the gross receipts from the sale of in this state of, and the storage, use, or other consumption in this state of, a qualified drayage truck. The bill would define “qualified drayage truck” to mean a new or used drayage truck that meets the criteria of certain emission reduction programs.
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.
This bill would specify that this exemption does not apply to local sales and use taxes or transactions and use taxes.
Existing law requires that any bill introduced on or after January 1, 2020, that would authorize certain tax expenditures, as defined, or tax exemptions contain, among other things, specific goals, purposes, and objectives that the tax expenditure or exemption will achieve, detailed performance indicators, and data collection requirements.
This bill would include additional information required for any bill authorizing a new tax expenditure.
This bill would take effect immediately as a tax levy, but its operative date would depend on its effective date.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

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


SECTION 1.

 The Legislature finds and declares all of the following:
(a) In 2020, the State Air Resources Board adopted regulations to reduce greenhouse gas emissions from heavy-duty trucks and drayage trucks. These regulations include a first-in-the-world rule requiring truck manufacturers to transition from diesel trucks and vans to electric zero-emission trucks beginning in 2024 and requiring every new truck sold in California to be zero-emission by 2045. The State Air Resources Board approved the “Heavy-Duty Low NOx Omnibus Regulation,” which requires manufacturers of heavy-duty diesel trucks to comply with tougher emission standards, overhaul engine testing procedures, and further extend engine warranties to ensure that emissions of oxides of nitrogen are reduced to help California meet federal air quality standards and critical public health goals.
(b) Also in 2020, Governor Gavin Newsom issued Executive Order No. N-79-20, which, among other things, requires all drayage trucks in the state to be zero-emission by 2035 and sets a number of vehicle emissions goals for the state, including having 100 percent of heavy-duty vehicles in the state be zero-emission by 2045.
(c) There are an estimated 30,000 drayage trucks that service California’s ports each year. Most of these are used trucks. Used drayage trucks cost around $50,000. New zero-emission trucks cost $350,000. Unless funding is provided to offset the cost of new and used zero-emission trucks, it will be nearly impossible for individuals and small businesses to comply with the new requirement. If funding is provided to offset the cost of new and used zero-emission trucks, the sales and use tax will be too high for people to afford since it will be based on the full price of the truck.
(d) Legislation is necessary to exclude zero-emission and near-zero-emission drayage trucks from the state portion of the sales and use tax so individuals will be able to afford these new and used trucks to be in compliance with state mandates to meet the state’s greenhouse gas emissions and public health goals.
(e) The state currently exempts the following items from certain state sales and use taxes:
(1) Zero-emission technology transit buses.
(2) Certain government purchases of public passenger transportation vehicles.
(3) Certain new or remanufactured trucks, truck tractors, semitrailers, or trailers that have an unladen weight of 6,000 pounds or more, or new or remanufactured trailer coaches or new or remanufactured auxiliary dollies, purchased from a dealer located outside this state for use without this state.
(4) Diesel fuel consumed during the activities of a farming business or food processing, as specified.
(5) Farm equipment, machinery, and their parts sold to or purchased by specified persons engaged in the business of producing and harvesting agricultural products.
(6) Certain equipment used in manufacturing, research and development in biotechnology, and research and development in the physical, engineering, and life sciences.
(7) Electric power generation and distribution equipment when sold to or purchased by certain qualifying electric power generators or distributors for use primarily in electric power generation or production, or storage and distribution activities.

SEC. 2.

 Section 6356.1 is added to the Revenue and Taxation Code, to read:

6356.1.
 (a) On and after January 1, 2023, there are exempted from the taxes imposed by this part the gross receipts from the sale of in this state of, and the storage, use, or other consumption in this state of, a qualified drayage truck.
(b) As used in this section, “qualified drayage truck” means a new or used drayage truck that meets, on or after January 1, 2021, the criteria of any of the following:
(1) The California Hybrid and Zero-Emission Truck and Bus Voucher Incentive Project funded by the Air Quality Improvement Program established pursuant to Section 44274 of the Health and Safety Code.
(2) The Carl Moyer Memorial Air Quality Standards Attainment Program (Chapter 9 (commencing with Section 44275) of Part 5 of Division 26 of the Health and Safety Code).
(3) The Volkswagen Environmental Mitigation Trust for California pursuant to Section 39614 of the Health and Safety Code.
(c) Notwithstanding any provision of the Bradley-Burns Uniform Local Sales and Use Tax Law (Part 1.5 (commencing with Section 7200)) or the Transactions and Use Tax Law (Part 1.6 (commencing with Section 7251)), the exemption established by this section shall not apply with respect to any tax levied by a county, city, or district pursuant to, or in accordance with, either of those laws.
(d) This section shall become inoperative on January 1, 2028, and as of that date is repealed.

SEC. 3.

 (a) It is the intent of the Legislature to apply the requirements of Section 41 of the Revenue and Taxation Code to this act.
(b) With respect to Section 6356.1 of the Revenue and Taxation Code, as added by this act, the Legislature finds and declares as follows:
(1) The goal of Section 6356.1 of the Revenue and Taxation Code, as added by this act, is to help achieve California’s greenhouse gas reduction goals and the goal of having 100 percent of drayage trucks in California be zero-emission by 2035, consistent with Executive Order No. N-79-20, and also incentivize the purchase of new and used zero-emission and near-zero-emission drayage trucks as soon as possible.
(2) The performance indicators related to this act are as follows:
(A) The annual number of zero-emission and near-zero-emission drayage trucks purchased.
(B) The annual number of purchased drayage trucks that are not zero-emission or near-zero-emission drayage trucks.
(c) To measure the goals set forth in paragraph (1) of subdivision (b), the California Department of Tax and Fee Administration shall measure how many Californians used the sales and use tax exemption set forth in Section 6356.1 of the Revenue and Taxation Code, as added by this act, and report to the Legislature annually on its findings beginning on and after January 1, 2024. The reports shall be submitted in compliance with Section 9795 of the Government Code.

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. However, the provisions of this act shall become operative on the first day of the first calendar quarter commencing more than 90 days after the effective date of this act.