As of the deadline for introducing legislation, California lawmakers proposed more than $6.2 billion a year in higher taxes and fees, the nonpartisan California Tax Foundation reported April 2. This figure will grow substantially as fiscal estimates are prepared for recently amended measures, the foundation added.
A $4 billion-per-year tax on sweetened beverages (AB 138) is the largest tax documented in the Tax and Fee Report, which is based on higher taxes, fees, assessments and charges proposed from the first day of the legislative session (December 3, 2018) through the bill introduction deadline (February 22, 2019). During this period, lawmakers introduced 2,721 bills and constitutional amendments, including 40 that contained higher taxes or fees.
Another bill (SB 522) proposes an as-yet-unspecified sales tax on services that likely would be much higher than the soda tax. The estimated cost of SB 522 was not included in the report’s cumulative total because it will vary dramatically based on what provisions are amended into the bill. A similar proposal from the prior legislative session was estimated to cost taxpayers as much as $49 billion per year.
Several taxes and fees were amended into bills after the period covered by this report, and will be included in the second-quarter update. These include a corporation income tax increase on businesses based on chief executive officers’ compensation (SB 37); a proposed estate tax that the author says would cost taxpayers $500 million to $1 billion per year (SB 378); a proposed repeal of tax exemptions including those for food, medicine and water, and repeal of tax incentives including the research-and-development tax credit, water’s-edge elections and others, costing taxpayers approximately $20 billion per year (SB 468); and a proposal for various tax-like “fees” on water users that does not yet have a fiscal impact estimate (AB 217).
Last year, Governor Jerry Brown signed legislation totaling $200 million in new annual taxes and fees. In January, Governor Gavin Newsom proposed a $209 billion state budget that includes almost $20 billion in reserve accounts, and calls for a $7.6 billion increase in spending over the enacted 2018-19 budget.
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