BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNANCE AND FINANCE
Senator Robert M. Hertzberg, Chair
2015 - 2016 Regular
------------------------------------------------------------------
|Bill No: |AB 1561 |Hearing |6/22/16 |
| | |Date: | |
|----------+---------------------------------+-----------+---------|
|Author: |Cristina Garcia |Tax Levy: |Yes |
|----------+---------------------------------+-----------+---------|
|Version: |6/15/16 |Fiscal: |Yes |
------------------------------------------------------------------
-----------------------------------------------------------------
|Consultant|Bouaziz |
|: | |
-----------------------------------------------------------------
Sales and use taxes: exemption: sanitary napkins: tampons:
menstrual cups and sponges
Establishes a temporary sales and use tax exemption for tampons,
sanitary napkins, menstrual cups, and menstrual sponges.
Background
California law allows various income tax credits, deductions,
and sales and use tax exemptions to provide incentives to
compensate taxpayers that incur certain expenses, such as child
adoption, or to influence behavior, including business practices
and decisions, such as research and development credits. The
Legislature typically enacts such tax incentives to encourage
taxpayers to do something that but for the tax credit, they
would not do. The Department of Finance is required to annually
publish a list of tax expenditures. Currently, tax expenditures
exceed $57 billion dollars.
State law imposes a sales and use tax (SUT) on the sale,
storage, or use of tangible personal property unless exempted by
state law. Cities and Counties may increase the SUT rate up to
2% as a transactions and use tax for either specific or general
purposes with voter approval as required by the California
Constitution.
The current state SUT is 7.5%, but beginning January 1, 2017,
AB 1561 (Cristina Garcia) 6/15/16
Page 2 of ?
the state SUT rate on tangible personal property will be 7.25%
and imposed as follows:
-------------------------------------------------------------
| | | |
| Rate | Jurisdiction | Purpose/Authority |
| | | |
|-------+--------------------+--------------------------------|
| | | |
|3.9375%|State (General |State general purposes |
| |Fund) | |
| | | |
|-------+--------------------+--------------------------------|
| |Local Revenue Fund | |
|1.0625%|2011 |Realignment of local public |
| | |safety services |
| | | |
|-------+--------------------+--------------------------------|
| | | |
| 0.50% |State (Local |Local governments to fund |
| |Revenue Fund) |health and welfare programs |
| | | |
|-------+--------------------+--------------------------------|
| | | |
| 0.50% |State (Local Public |Local governments to fund |
| |Safety Fund) |public safety services |
| | | |
|-------+--------------------+--------------------------------|
| | | |
| 1.25% |Local (City/County) | |
| | | |
| | | |
| |1.00% City and |City and county general |
| |County |operations. |
| | | |
| |0.25% County | |
| | |Dedicated to county |
| | |transportation purposes |
| | | |
| | | |
-------------------------------------------------------------
Proposed Law
AB 1561 (Cristina Garcia) 6/15/16
Page 3 of ?
Assembly Bill 1561 establishes a temporary sales and use tax
exemption for tampons, sanitary napkins, menstrual sponges, and
menstrual cups. As a tax levy, the bill would take effect
immediately, and remains in effect until January 1, 2022.
AB 1561 provides that, notwithstanding existing law, the state
shall not reimburse any local agency for SUT revenues lost as a
result of this exemption.
State Revenue Impact
According to the Board of Equalization, AB 1561 would result in
an annual state revenue loss of
$20 million.
Comments
AB 1561 (Cristina Garcia) 6/15/16
Page 4 of ?
1. Purpose of the bill. According to the author, "AB 1561 is a
bipartisan effort to make menstrual products exempt from the
sales and use tax at both the state and local level. California
women pay over 20 million dollars annually for taxing tampons
and sanitary napkins, which are essential health items for
women. As a state we should not be taxing women for being born
women. The tax is especially unjust for women who are
low-income or homeless who struggle to pay for these basic
necessities each month for the majority of their adult life.
Menstrual products need to be more accessible and eliminating
the tax on tampons and sanitary napkins is an important first
step in making them more affordable. California's tax code
exempts health items like walkers, medical identification tags,
and prescription medication, including Viagra. Tampons and
sanitary napkins are not exempt even though women do not have
the choice to ignore their periods and are far from being
luxuries items. When these items are labelled as "feminine
hygiene" products, it makes people forget that the FDA regulates
both products as medical devices. There is no equivalent health
product that is used only by one gender on a monthly basis for
40 years of life. Across the world, countries as well as select
states in the US are organizing to repeal the sales tax on
feminine hygiene products. California should continue to be a
leader by addressing the gender inequality in our tax code and
exempt menstrual products."
2. A new tax expenditure. Existing law provides various
credits, deductions, exclusions, and exemptions for particular
taxpayer groups. In the late 1960s, U.S. Treasury officials
began arguing that these features of the tax law should be
referred to as "expenditures," since they are generally enacted
to accomplish some governmental purpose and there is a
determinable cost associated with each (in the form of foregone
revenues). This bill would create a new tax expenditure,
costing the general fund $20 million dollars in foregone revenue
each year. The tradeoff for providing new tax expenditure,
resulting in revenue losses, is higher taxes or reductions to
other services or programs.
3. How is tax expenditure different from a direct expenditure?
As the Department of Finance notes in its annual Tax Expenditure
Report, there are several key differences between tax
expenditures and direct expenditures. First, tax expenditures
are reviewed less frequently than direct expenditures once they
AB 1561 (Cristina Garcia) 6/15/16
Page 5 of ?
are put in place. This can offer taxpayers greater certainty,
but it can also result in tax expenditures remaining a part of
the tax code without demonstrating any public benefit. Second,
there is generally no control over the amount of revenue losses
associated with any given tax expenditure. Finally, once
enacted, it takes a two-thirds vote to rescind an existing tax
expenditure absent a sunset date. AB 1561 has a sunset date.
4. Regressive tax. The sales tax is considered by most tax
experts to be regressive, meaning that the incidence falls more
on low-income individuals than high-income individuals. While
this bill would provide important financial relief to low-income
women struggling to make ends meet, it would also provide relief
to women regardless of income, as women of all incomes purchase
tampons, sanitary napkins, menstrual sponges, and menstrual
cups.
5. Necessities of life. Current state provides sales and use
exemptions for goods that are considered "necessities of life."
The exemption includes most food items, prescription medication,
and gas, electricity and water utilities sold to consumers
through mains, lines, and pipes. Tampons, sanitary napkins,
menstrual cups, and menstrual sponges are medical necessities
for women's health, but are subject to sales and use tax. The
author of the bill argues that other health related necessities
of life are exempt from sales and use tax, and as a necessity of
life for women, tampons, sanitary napkins, menstrual sponges,
and menstrual cups should also be exempt from sales and use tax.
6. Is it enough? A recent editorial in the New York Times
noted, that even without being taxed, tampons and pads are
unaffordable for some individuals. As a result, the editorial
noted that policymakers around the country are offering
different proposals for ensuring that women have access to these
products. Specifically, New York City Councilmember Julissa
Ferreras-Copeland is working on legislation to require all
public schools in the city to provide free tampons and pads in
restrooms. Moreover, in Congress, Representative Grace Meng
introduced legislation allowing individuals to pay for feminine
hygiene products with their health care spending accounts.
Assembly Actions
AB 1561 (Cristina Garcia) 6/15/16
Page 6 of ?
Assembly Revenue and Taxation 9-0
Assembly Appropriations 18-1
Assembly Floor 78-0
Support and
Opposition (6/15/16)
Support : Act for Women and Girls; American Academy of
Pediatrics; Asian Pacific Islander American Public Affairs
Association; Bayer; Black Women for Wellness; California Asian
Pacific Chamber of Commerce; California Grocers Association;
California Latinas for Reproductive Justice; California Primary
Care Association; California Retailers Association; California
State Board of Equalization; California Women's Law Center; City
of Glendale; City of West Hollywood; Community Action Fund of
Planned Parenthood of Orange and San Bernardino Counties;
Conscious Period; Equal Rights Advocates; Fiona Ma, State Board
of Equalization Member; Forward Together; George Runner, State
Board of Equalization Member; Hispanas Organized for Political
Equality; Junior Leagues of California State Public Affairs
Committee; Junior League of Long Beach; NARAL Pro-Choice
California; National Association of Social Workers-CA Chapter;
National Center for Youth Law; National Council of Jewish Women;
Physicians for Reproductive Health; Planned Parenthood Action
Fund of Orange and San Bernardino Counties; Planned Parenthood
Action Fund of Santa Barbara, Ventura, & San Luis Obispo
Counties; Planned Parenthood Action Fund of the Pacific
Southwest; Planned Parenthood Advocacy Project Los Angeles
County; Planned Parenthood Advocates Pasadena and San Gabriel
Valley; Planned Parenthood Affiliates of California; Planned
Parenthood Mar Monte; Planned Parenthood Northern California
Action Fund; Target; Unite for Reproductive and Gender Equity;
Walmart; Women Lawyers of Sacramento.
Opposition : California State Association of Counties; League of
California Cities.
-- END --
AB 1561 (Cristina Garcia) 6/15/16
Page 7 of ?