Calif. Service Tax Proposed

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Two measures for expanding the sales tax to services have been introduced to the California State Legislature. The first, AB 1963, proposed by Assemblywoman Alyson Huber, would impose a blanket 4 percent tax on all services, except for medical, educational, auto repair, tax preparation, legal and agricultural services. 

The second measure, AB 2540, sponsored by Assemblyman Gatto, specifically names “pool maintenance” as one of 27 services upon which an additional tax would be imposed. Others named include massage, party planning, limousine rental, cosmetic surgery and furniture repair. 

According to John A. Norwood, President of SPEC, this is not the first time the idea of expanding the state tax to services has been considered this year. The concept was first proposed ballot measure sponsored by the “Think Long Committee for California.” The committee, created by billionaire Nicholas Berggruen, proposed a massive overhaul of California taxes, including the addition of a new service tax. The Committee recently announced that they will not pursue their tax reform initiative this year. Unfortunately, the idea was embraced by a few legislators that, in turn, introduced their own legislative proposals. 

 “These two proposed bills are sure to garner a lot of opposition from those service providers throughout the state,” said Norwood. “Pool and spa professionals have been targeted by one specific measure and that should be of great concern to SPEC members.”

Both of these bills were introduced late in February. All bills must be in print for 30 days prior to being heard in a policy or fiscal committee. Both measures will have to be heard in the Assembly Revenue & Taxation Committee. 

 “SPEC members should be expecting a request for grassroots action when the bills are set to be heard in the committee,” said Norwood. “Grassroots action and member participation can be very helpful in influencing legislator’s ultimate vote on such issues.” 

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