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AB-2006 Sales and Use Tax Law: exemption: over-the-counter medication.(2023-2024)



Current Version: 01/31/24 - Introduced

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AB2006:v99#DOCUMENT


CALIFORNIA LEGISLATURE— 2023–2024 REGULAR SESSION

Assembly Bill
No. 2006

Introduced by Assembly Member Mathis

January 31, 2024

An act to add and repeal Section 6369.3 of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.


LEGISLATIVE COUNSEL'S DIGEST


AB 2006, as introduced, Mathis. Sales and Use Tax Law: exemption: over-the-counter medication.
Existing state 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. The Sales and Use Tax Law provides various exemptions from those taxes.
This bill would, until January 1, 2030, 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, over-the-counter medication, as defined.
Existing law requires a bill authorizing a new tax expenditure to contain, among other things, specific goals, purposes, and objectives that the tax expenditure will achieve, detailed performance indicators, and data collection requirements.
This bill would make findings detailing the goals of the above-described tax expenditure and performance indicators for determining whether the tax expenditure meets those goals.
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 provide that the exemption created by this bill does not apply to local sales and use taxes or transactions and use taxes.
Existing law imposes or dedicates certain state sales and use tax rates for local funding, including through the Local Revenue Fund 2011.
This bill would provide that the exemption created by this bill does not apply to those state sales and use tax rates imposed or dedicated for local government funding, including those rates for which revenues are deposited into the Local Revenue Fund 2011.
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 6369.3 is added to the Revenue and Taxation Code, to read:

6369.3.
 (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, over-the-counter medication.
(b) For purposes of this section, “over-the-counter medication” means a nonprescription drug regulated by the Food and Drug Administration pursuant to the federal Food, Drug, and Cosmetic Act (21 U.S.C. Sec. 301 et seq.) and federal regulations adopted pursuant to that act, including, but not limited to, Part 211 of Title 21 of the Code of Federal Regulations.
(c) (1) 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 subdivision (a) does not apply with respect to any tax levied by a county, city, or district pursuant to, or in accordance with, either of those laws.
(2) Notwithstanding subdivision (a), the exemption established by this section does not apply with respect to any tax levied pursuant to Section 6051.2 or 6201.2, pursuant to Section 35 of Article XIII of the California Constitution, or any tax levied pursuant to Section 6051 or 6201 that is deposited in the State Treasury to the credit of the Local Revenue Fund 2011 pursuant to Section 6051.15 or 6201.15.
(d) (1) For purposes of complying with Section 41, the Legislature finds and declares the specific goal, purpose, and objective that the exemption will achieve is to create tax parity between prescription and over-the-counter medications.
(2) (A) The performance indicators for the Legislature to use when measuring whether the tax expenditure meets the goal, purpose, and objective shall be the number of transactions exempt from sales and use tax pursuant to this section, and the total dollar value of taxes forgone.
(B) No later than January 1, 2026, and each January 1 thereafter, the Department shall submit a report to the Legislature, in compliance with Section 9795 of the Government Code, detailing the number of transactions exempt from sales and use tax pursuant to this section, and the total dollar value of taxes forgone.
(e) This section shall remain in effect only until January 1, 2030, and as of that date is repealed.

SEC. 2.

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