AB 2184: Cigarette tax: stamps and meter machines: report.
- Session Year: 2015-2016
- House: Assembly
- Latest Version Date: 2016-04-06
The Cigarette and Tobacco Products Tax Law imposes a tax on distributors of cigarettes at the rate of $0.87 per package of 20 cigarettes. That law requires that tax be paid through the use of stamps or meter impressions, and requires that these stamps or meter impressions be affixed to each package of cigarettes distributed. That law requires stamps and meter register settings to be sold at their denominated values less 0.85% to licensed distributors.
Existing law, no later than July 1, 2005, required the Board of Equalization to submit a report to the Legislature that evaluates the average actual costs, including labor, for applying indicia or impressions, bonding, warehousing, and leasing stamping equipment, including case cutters and packers, associated with applying stamps or meter impressions to cigarette packages and requires that report to be updated every 2 years.
This bill instead would require a report making the same evaluation to be submitted to the Legislature no later than January 1, 2018, and would require that report to be updated and submitted to the Legislature every 2 years.
The Cigarette and Tobacco Products Tax Law imposes a tax on distributors of cigarettes at the rate of $0.87 per package of 20 cigarettes. That law requires that tax be paid through the use of stamps or meter impressions, and requires that these stamps or meter impressions be affixed to each package of cigarettes distributed. That law requires stamps and meter register settings to be sold at their denominated values less 0.85% to licensed distributors.
Existing law, no later than July 1, 2005, required the Board of Equalization to submit a report to the Legislature that evaluates the average actual costs, including labor, for applying indicia or impressions, bonding, warehousing, and leasing stamping equipment, including case cutters and packers, associated with applying stamps or meter impressions to cigarette packages and requires that report to be updated every 2 years.
This bill instead would require a report making the same evaluation to be submitted to the Legislature no later than January 1, 2018, and would require that report to be updated and submitted to the Legislature every 2 years.
Existing law imposes various state income, franchise, property, and excise taxes and various user, regulatory, and franchise fees in connection with activity or property within the jurisdiction of this state. Existing law authorizes counties, cities, and other local agencies to impose various taxes and fees in connection with activity or property within those jurisdictions.
This bill would prohibit the imposition by the state and any political subdivisions of the state of a tax on Internet access or use of Internet access.
Existing law imposes various state income, franchise, property, and excise taxes and various user, regulatory, and franchise fees in connection with activity or property within the jurisdiction of this state. Existing law authorizes counties, cities, and other local agencies to impose various taxes and fees in connection with activity or property within those jurisdictions.
This bill would prohibit the imposition by the state and any political subdivisions of the state of a tax on Internet access or use of Internet access.
(a)No later than January 1, 2018, the board shall submit a report to the Legislature a report that evaluates the average actual costs, including labor for applying indicia or impressions, bonding, warehousing, and leasing stamping equipment, including case cutters and packers, associated with applying stamps or meter impressions to cigarette packages.
(b)(1)A report to be submitted pursuant to subdivision (a) shall be submitted in compliance with Section 9795 of the Government Code.
(2)Notwithstanding Section 10231.5 of the Government Code, the report required by subdivision (a) shall be updated and submitted to the Legislature every two years.
(a)No later than July 1, 2005, January 1, 2018, the board shall submit a report to the Legislature that evaluates the average actual costs, including labor for applying indicia or impressions, bonding, warehousing, and leasing stamping equipment, including case cutters and packers, associated with applying stamps or meter impressions to cigarette packages. This report shall be updated every two years.
(b)(1)A report to be submitted pursuant to subdivision (a) shall be submitted in compliance with Section 9795 of the Government Code.
(2)Notwithstanding Section 10231.5 of the Government Code, the report required by subdivision (a) shall be updated and submitted to the Legislature every two years.
SECTION 1.Part 16 (commencing with Section 35100) is added to Division 2 of the Revenue and Taxation Code, to read:16.California Internet Tax Freedom Modernization Act of 201635100.This part shall be known and may be cited as the California Internet Tax Freedom Modernization Act of 2016.
35101.The Legislature finds and declares all of the following:
(a)Due to the continued uncertainty created by the United States Congress failure to make permanent the federal Internet Tax Freedom Act, it is the intent of the Legislature to provide California consumers with certainty that Internet access will never by burdened by rates of taxation that are discriminatory in nature. This concern is especially pertinent because most Californians have never paid taxes on their Internet access.
(b)The Internet is inherently a matter of interstate and foreign commerce within the jurisdiction of the United States Congress under Section 8 of Article I of the United States Constitution.
(c)The electronic marketplace of services, products, and ideas available through the Internet or online services can be especially beneficial to all Californians, regardless of age, ethnicity, or gender, as well as the physically challenged, citizens in rural areas, and small businesses. It also offers a variety of uses and benefits for educational institutions and charitable organizations.
(d)Taxes imposed on Internet access or online services by state and local governments could subject consumers, businesses, and other users engaged in interstate and foreign commerce to multiple, confusing, and burdensome taxation, thereby resulting in additional costs that could reverse the trend of broadband adoption throughout the state. This could threaten Internet access for Californians at home, work, and school, and is counterproductive to established state policies, such as the promotion of telecommuting.
(e)Companies providing Internet access are making substantial capital investments in new plants and equipment. Multiple and excessive taxation could place that investment at risk, and discourage the expansion of investment in Internet access equipment, thereby placing California at a long-term competitive disadvantage.
(f)Services provided by local governments are important and valuable to both consumers and businesses, and this act is not intended to interfere with existing sources of revenue that provide funding for local government services. This act is intended to impose a moratorium on new taxes imposed on Internet access and online services, as well as the discriminatory application of existing or new taxes, as defined herein, to Internet access or online services. Nothing in this act shall be interpreted as precluding the imposition or collection of new or existing taxes of general application that are imposed or assessed in a uniform and nondiscriminatory manner without regard to whether the activities or transactions taxed are conducted through the use of the Internet, Internet access, or online services.
(g)A uniform and coherent national policy concerning national and subnational taxation of the Internet and online services, in a manner which does not unreasonably burden interstate and foreign commerce, may be developed by the United States Congress, acting pursuant to the powers granted to it by clause 3 of Section 8 of Article I of the United States Constitution. Until that national policy is developed, and determined by the Legislature to be in the best interest of the people of the State of California, a limited preemption of local taxing authority of the Internet and online services is appropriate.
(h)Currently the state is not imposing any discriminatory taxes, within the meaning of this act, on Internet access or online services. It is the intent of this Legislature that no existing or future state taxes or state fees be imposed by the state in a discriminatory manner upon Internet access or online services. This statement of legislative intent is meant to place the greatest possible barrier to the creation of discriminatory taxes or fees upon this Legislature and all future Legislatures.
(i)The Legislature finds and declares that no local government is currently imposing or collecting any tax on Internet access or online services, and further that no local government should impose or collect any tax on Internet access or online services that is discriminatory within the meaning of this act.
(j)For these reasons, the Legislature finds that, subject to certain exceptions designed to protect existing local government revenue, preemption of local government authority to levy taxes on online services and access to the Internet is a matter of statewide concern.
35102.(a)The state and any political subdivision of the state shall not impose, assess, or collect a tax on Internet access or use of Internet access.
(b)For purposes of this part, all of the following definitions shall apply:
(1)Direct costs means costs incurred by a governmental authority solely because of an Internet access providers use of the public right-of-way, that is determined in a manner consistent with generally accepted accounting principles, but does not include costs that the governmental authority would have incurred if the Internet access provider did not make such use of the public right-of-way.
(2)Internet means collectively the myriad of computer and telecommunications facilities, including equipment and operating software, which comprise the interconnected worldwide network of networks that employ the Transmission Control Protocol/Internet Protocol (TCP/IP), or any predecessor or successor protocols to that protocol, to communicate information of all kinds by wire or radio.
(3)(A)Internet access means a service that enables users to connect to the Internet to access content, information, or other services offered over the Internet, without regard to whether the service is referred to telecommunications, communications, transmission, or similar services, and without regard to whether a provider of the service is subject to regulation by the Federal Communications Commission as a common carrier under Section 201 and following of Title 47 of the United States Code. Internet access includes all of the following:
(i)The purchase, use, or sale of communications services, including telecommunications services by a provider of a service described in this subparagraph, to the extent the communications services are purchased, used, or sold to do either of the following:
(I)Provide that service.
(II)Otherwise enable users to access content, information, or other services offered over the Internet.
(ii)Services that are incidental to the provision of Internet access when furnished to users as part of that access, such as a home page, electronic mail and instant messaging, including voice- and video-capable electronic mail and instant messaging, video clips, and personal electronic storage capacity.
(iii)A homepage, electronic mail and instant messaging, including voice- and video-capable electronic mail and instant messaging, video clips, and personal electronic storage capacity, that are provided independently or not packaged with Internet access.
(B)Internet access does not include voice, audio or video programming, or other products and services, except services described in clause (i), (ii), or (iii) of subparagraph (A), that utilize Internet protocol or any successor protocol and for which there is a charge, regardless of whether that charge is separately stated or aggregated with the charge for services described in clause (i), (ii), or (iii) of subparagraph (A).
(4)Political subdivision means a city, county, or city and county, including a charter city or county, any special district, or any other local or regional governmental entity.
(5)(A)Tax means a tax as that term is defined in subdivision (b) of Section 3 of Article XIIIA of, or subdivision (e) of Section 1 of Article XIIIC of, the California Constitution.
(B)Tax does not include any franchise fee or similar fee imposed by a local franchising authority, pursuant to Section 622 or 653 of the federal Communications Act of 1934 (47 U.S.C. Secs. 542 and 573), or any other fee related to obligations or telecommunications carriers under the federal Communications Act of 1934 (47 U.S.C. Sec. 151 et seq.), as those laws read on the effective date of this section, except to the extent that any of the following are true:
(i)The fee is not imposed for the purpose of recovering direct costs incurred by the local franchising authority or other governmental authority from providing the specific privilege, service, or benefit conferred to the payor of the fee.
(ii)The fee is imposed for the use of a public right-of-way based on a percentage of the service revenue and the fee exceeds the incremental direct costs incurred by the governmental authority associated with the provision of that right-of-way to the provider of Internet access.
(6)(A)Tax on Internet access or use of Internet access means a tax on Internet access or the use of Internet access, regardless of whether the tax is imposed on a provider of Internet access or a purchaser of Internet access and regardless of terminology used to describe the tax.
(B)Tax on Internet access or use of Internet access does not include a tax levied upon or measured by net income, capital stock, net worth, or property value.
(7)Use of Internet access includes the exercise of any right to Internet access.
This part shall be known and may be cited as the California Internet Tax Freedom Modernization Act of 2016.
35101.The Legislature finds and declares all of the following:
(a)Due to the continued uncertainty created by the United States Congress failure to make permanent the federal Internet Tax Freedom Act, it is the intent of the Legislature to provide California consumers with certainty that Internet access will never by burdened by rates of taxation that are discriminatory in nature. This concern is especially pertinent because most Californians have never paid taxes on their Internet access.
(b)The Internet is inherently a matter of interstate and foreign commerce within the jurisdiction of the United States Congress under Section 8 of Article I of the United States Constitution.
(c)The electronic marketplace of services, products, and ideas available through the Internet or online services can be especially beneficial to all Californians, regardless of age, ethnicity, or gender, as well as the physically challenged, citizens in rural areas, and small businesses. It also offers a variety of uses and benefits for educational institutions and charitable organizations.
(d)Taxes imposed on Internet access or online services by state and local governments could subject consumers, businesses, and other users engaged in interstate and foreign commerce to multiple, confusing, and burdensome taxation, thereby resulting in additional costs that could reverse the trend of broadband adoption throughout the state. This could threaten Internet access for Californians at home, work, and school, and is counterproductive to established state policies, such as the promotion of telecommuting.
(e)Companies providing Internet access are making substantial capital investments in new plants and equipment. Multiple and excessive taxation could place that investment at risk, and discourage the expansion of investment in Internet access equipment, thereby placing California at a long-term competitive disadvantage.
(f)Services provided by local governments are important and valuable to both consumers and businesses, and this act is not intended to interfere with existing sources of revenue that provide funding for local government services. This act is intended to impose a moratorium on new taxes imposed on Internet access and online services, as well as the discriminatory application of existing or new taxes, as defined herein, to Internet access or online services. Nothing in this act shall be interpreted as precluding the imposition or collection of new or existing taxes of general application that are imposed or assessed in a uniform and nondiscriminatory manner without regard to whether the activities or transactions taxed are conducted through the use of the Internet, Internet access, or online services.
(g)A uniform and coherent national policy concerning national and subnational taxation of the Internet and online services, in a manner which does not unreasonably burden interstate and foreign commerce, may be developed by the United States Congress, acting pursuant to the powers granted to it by clause 3 of Section 8 of Article I of the United States Constitution. Until that national policy is developed, and determined by the Legislature to be in the best interest of the people of the State of California, a limited preemption of local taxing authority of the Internet and online services is appropriate.
(h)Currently the state is not imposing any discriminatory taxes, within the meaning of this act, on Internet access or online services. It is the intent of this Legislature that no existing or future state taxes or state fees be imposed by the state in a discriminatory manner upon Internet access or online services. This statement of legislative intent is meant to place the greatest possible barrier to the creation of discriminatory taxes or fees upon this Legislature and all future Legislatures.
(i)The Legislature finds and declares that no local government is currently imposing or collecting any tax on Internet access or online services, and further that no local government should impose or collect any tax on Internet access or online services that is discriminatory within the meaning of this act.
(j)For these reasons, the Legislature finds that, subject to certain exceptions designed to protect existing local government revenue, preemption of local government authority to levy taxes on online services and access to the Internet is a matter of statewide concern.
35102.(a)The state and any political subdivision of the state shall not impose, assess, or collect a tax on Internet access or use of Internet access.
(b)For purposes of this part, all of the following definitions shall apply:
(1)Direct costs means costs incurred by a governmental authority solely because of an Internet access providers use of the public right-of-way, that is determined in a manner consistent with generally accepted accounting principles, but does not include costs that the governmental authority would have incurred if the Internet access provider did not make such use of the public right-of-way.
(2)Internet means collectively the myriad of computer and telecommunications facilities, including equipment and operating software, which comprise the interconnected worldwide network of networks that employ the Transmission Control Protocol/Internet Protocol (TCP/IP), or any predecessor or successor protocols to that protocol, to communicate information of all kinds by wire or radio.
(3)(A)Internet access means a service that enables users to connect to the Internet to access content, information, or other services offered over the Internet, without regard to whether the service is referred to telecommunications, communications, transmission, or similar services, and without regard to whether a provider of the service is subject to regulation by the Federal Communications Commission as a common carrier under Section 201 and following of Title 47 of the United States Code. Internet access includes all of the following:
(i)The purchase, use, or sale of communications services, including telecommunications services by a provider of a service described in this subparagraph, to the extent the communications services are purchased, used, or sold to do either of the following:
(I)Provide that service.
(II)Otherwise enable users to access content, information, or other services offered over the Internet.
(ii)Services that are incidental to the provision of Internet access when furnished to users as part of that access, such as a home page, electronic mail and instant messaging, including voice- and video-capable electronic mail and instant messaging, video clips, and personal electronic storage capacity.
(iii)A homepage, electronic mail and instant messaging, including voice- and video-capable electronic mail and instant messaging, video clips, and personal electronic storage capacity, that are provided independently or not packaged with Internet access.
(B)Internet access does not include voice, audio or video programming, or other products and services, except services described in clause (i), (ii), or (iii) of subparagraph (A), that utilize Internet protocol or any successor protocol and for which there is a charge, regardless of whether that charge is separately stated or aggregated with the charge for services described in clause (i), (ii), or (iii) of subparagraph (A).
(4)Political subdivision means a city, county, or city and county, including a charter city or county, any special district, or any other local or regional governmental entity.
(5)(A)Tax means a tax as that term is defined in subdivision (b) of Section 3 of Article XIIIA of, or subdivision (e) of Section 1 of Article XIIIC of, the California Constitution.
(B)Tax does not include any franchise fee or similar fee imposed by a local franchising authority, pursuant to Section 622 or 653 of the federal Communications Act of 1934 (47 U.S.C. Secs. 542 and 573), or any other fee related to obligations or telecommunications carriers under the federal Communications Act of 1934 (47 U.S.C. Sec. 151 et seq.), as those laws read on the effective date of this section, except to the extent that any of the following are true:
(i)The fee is not imposed for the purpose of recovering direct costs incurred by the local franchising authority or other governmental authority from providing the specific privilege, service, or benefit conferred to the payor of the fee.
(ii)The fee is imposed for the use of a public right-of-way based on a percentage of the service revenue and the fee exceeds the incremental direct costs incurred by the governmental authority associated with the provision of that right-of-way to the provider of Internet access.
(6)(A)Tax on Internet access or use of Internet access means a tax on Internet access or the use of Internet access, regardless of whether the tax is imposed on a provider of Internet access or a purchaser of Internet access and regardless of terminology used to describe the tax.
(B)Tax on Internet access or use of Internet access does not include a tax levied upon or measured by net income, capital stock, net worth, or property value.
(7)Use of Internet access includes the exercise of any right to Internet access.
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Date
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Status
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|---|---|
| Feb 18, 2016 | Read first time. To print. |
| Feb 19, 2016 | From printer. May be heard in committee March 20. |
| Mar 3, 2016 | Referred to Coms. on A.,E.,S.,T., & I.M. and REV. & TAX. |
| Mar 29, 2016 | From committee chair, with author's amendments: Amend, and re-refer to Com. on A.,E.,S.,T., & I.M. Read second time and amended. |
| Mar 30, 2016 | Re-referred to Com. on A.,E.,S.,T., & I.M. |
| Apr 4, 2016 | Re-referred to Com. on RLS. pursuant to Assembly Rule 96. |
| Apr 6, 2016 | From committee chair, with author's amendments: Amend, and re-refer to Com. on RLS. Read second time and amended. |
| Apr 7, 2016 | From committee: Be re-referred to Com. on REV. & TAX. Re-referred. (Ayes 9. Noes 0.) (April 7). Re-referred to Com. on REV. & TAX. |
| Apr 7, 2016 | Re-referred to Com. on RLS. |
| Apr 19, 2016 | From committee: Do pass and re-refer to Com. on APPR. with recommendation: To Consent Calendar. (Ayes 9. Noes 0.) (April 18). Re-referred to Com. on APPR. |
| May 18, 2016 | In committee: Hearing postponed by committee. |
| May 25, 2016 | In committee: Set, first hearing. Referred to APPR. suspense file. |
| May 27, 2016 | In committee: Held under submission. |
| May 27, 2016 | Joint Rule 62(a), file notice suspended. |
| May 27, 2016 | Joint Rule 62(a), file notice suspended. (Page 4943.) |
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Date
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Description
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Location
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Votes
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|---|---|---|---|---|
| Apr 18, 2016 | Do pass and be re-referred to the Committee on [Appropriations] with recommendation: To Consent Calendar | Assembly Standing Committee on Revenue and Taxation |
Passed |
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| Apr 7, 2016 | Be re-referred to the Committee on [Revenue and Taxation] | Assembly Standing Committee on Rules |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
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Organization
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Position
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Date
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|---|---|---|
| ACLU of California | * Support | Jun 20, 2018 |
| California Immigrant Policy Center | * Support | Jun 20, 2018 |
| Lawyers Committee for Civil Rights of the San Francisco Bay Area | * Support | Jun 20, 2018 |
Date of Hearing: May 25, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
ABPCA Bill Id:AB 2184
Author:(Low) – As Amended Ver:April 6, 2016
Policy Committee: | Revenue and Taxation | Vote: | 9 - 0 |
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Urgency: No State Mandated Local Program: No Reimbursable: No
SUMMARY:
This bill requires the Board of Equalization (BOE) to submit a report every two years to the Legislature that evaluates the costs associated with applying stamps or meter impressions to cigarette packages.
FISCAL EFFECT:
Minor and absorbable costs.
COMMENTS:
Background and purposes. Existing law imposes a tax, under the Cigarette and Tobacco Products Tax Law, on cigarette distributors at the rate of $0.87 per package of 20 cigarettes. The law requires the cigarette tax be paid through the use of stamps or meter impressions. Specifically, these stamps or meter impressions must be affixed to each package of cigarettes distributed. This bill would continue the requirement that BOE report to the Legislature on the costs associated with applying these stamps or meter impressions.
- Analysis Prepared by: Luke Reidenbach / APPR. / (916) 319-2081
Date of Hearing: April 18, 2016
ASSEMBLY COMMITTEE ON REVENUE AND TAXATION
Sebastian Ridley-Thomas, Chair
ABPCA Bill Id:AB 2184 (
Author:Low) – As Amended Ver:April 6, 2016
Majority vote. Fiscal committee.
SUBJECT: Cigarette tax: stamps and meter machines: report
SUMMARY: Modifies the statutory provisions requiring the State Board of Equalization (BOE) to submit a report to the Legislature evaluating the average actual costs associated with applying stamps or meter impressions to cigarette packages. Specifically, this bill:
- Requires the BOE, no later than January 1, 2018, to submit a report to the Legislature evaluating the average actual costs associated with applying stamps or meter impressions to cigarette packages.
- Provides that this report shall be submitted in compliance with Government Code Section 9795.
- Provides that, notwithstanding Government Code Section 10231.5, the report shall be updated and submitted to the Legislature every two years.
EXISTING LAW:
- Provides that no later than July 1, 2005, the BOE must submit a report to the Legislature evaluating the average actual costs associated with applying stamps or meter impressions to cigarette packages.
- Requires this report to be updated every two years.
FISCAL EFFECT: Unknown
COMMENTS:
- Committee Staff Comments:
- General background: Existing law imposes a tax, under the Cigarette and Tobacco Products Tax Law, on cigarette distributors at the rate of $0.87 per package of 20 cigarettes. The law requires the cigarette tax be paid through the use of stamps or meter impressions. Specifically, these stamps or meter impressions must be affixed to each package of cigarettes distributed.
Existing law also requires the BOE to report to the Legislature on the costs associated with applying these stamps or meter impressions. The original report was due to the Legislature by July 1, 2005, and the law calls for this report to be updated every two years. The report examines costs ranging from labor to costs associated with the leasing of stamping equipment.
- This bill: This bill would call for the report to be issued to the Legislature no later than January 1, 2018. The report would, thereafter, be updated and submitted to the Legislature every two years. This bill also requires the report to be submitted in compliance with Government Code Section 9795. Section 9795, in turn, sets forth standards for reports submitted to the Legislature by state or local agencies. Any such report must be submitted as a printed copy to the Secretary of the Senate, as an electronic copy to the Chief Clerk of the Assembly, and as an electronic or printed copy to the Legislative Counsel. Moreover, each report must include a summary of its contents, not to exceed one page in length.
REGISTERED SUPPORT / OPPOSITION:
Support
None on file
Opposition
None on file
Analysis Prepared by: M. David Ruff / REV. & TAX. / (916) 319-2098
Discussed in Hearing
3MIN
Senate Standing Committee on Judiciary
6MIN
