Senate Bill No. 1338

Introduced by Senator Lara

February 19, 2016

An act to add Section 6377.5 to the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.

LEGISLATIVE COUNSEL’S DIGEST

SB 1338, as introduced, Lara. Sales and use taxes: exemption: zero-emission and near-zero-emission equipment.

Existing 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, and provides various exemptions from those taxes.

The bill would exempt from those taxes, on and after January 1, 2017, and before January 1, 2030, the gross receipts from the sale of, and the storage, use, or other consumption of, qualified tangible personal property purchased by a qualified person, as defined, for use primarily in, at, or on a marine terminal or qualified tangible personal property used primarily to maintain, repair, or test the above-described equipment, as provided. The bill would require the purchaser to furnish the retailer with an exemption certificate, as specified.

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 law authorizes districts, as specified, to impose transactions and use taxes in conformity with the Transactions and Use Tax Law, which conforms to the Sales and Use Tax Law. Exemptions from state sales and use taxes are incorporated into these laws.

This bill would specify that this exemption does not apply to local sales and use taxes, transactions and use taxes, and specified state taxes from which revenues are deposited into the Local Public Safety Fund, the Education Protection Account, the Local Revenue Fund, or the Local Revenue Fund 2011.

This bill would take effect immediately as a tax levy.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

(a) The Legislature finds and declares:

(1) California’s complex freight transportation system is
responsible for one-third of the state’s economy and jobs, with
freight-dependent industries accounting for over $700 billion in
revenue and over 5 million jobs in 2013, and is home to the largest
gateway for international trade and domestic commerce in the
nation, with an interconnected system of ports, railroads, highways,
and roads that allow goods from around the world to move
throughout the state.

(2) Significant investments in freight infrastructure are necessary
to ensure the continued economic competitiveness of our state’s
seaports and to deploy zero-emission and near-zero-emission
equipment. There are additional expenses that accompany
investment in the next generation of zero-emission and
near-zero-emission equipment and supporting infrastructure at
marine terminals in California’s public ports.

(3) The primary purpose of this act is to encourage the
development and growth of investment in, and subsequent
increased use of, California’s public port facilities and the
introduction of zero-emission and near-zero-emission equipment
and supporting infrastructure at California’s public port facilities.

(4) This legislation is necessary to further incentivize the earliest
possible investment in and adoption of zero-emission and
near-zero-emission technology at California’s public seaports.
Companies should be encouraged to take on the additional costs
of purchasing and maintaining zero-emission equipment and
supporting infrastructure in partnership with the state to achieve
the state’s emission reduction goals by reducing those state taxes
which would increase the ultimate cost of these new equipment
and infrastructure investments.

(b) It is the intent of the Legislature to incentivize the earliest
possible adoption of zero-emissions technology at California’s
public seaports and to eliminate taxes imposed on the purchase of
that equipment that further increase the costs of purchasing and
maintaining zero-emission equipment and supporting infrastructure,
which are already of significantly greater expense than
conventional equipment and infrastructure.

SEC. 2.  

Section 6377.5 is added to the Revenue and Taxation
Code, to read:

6377.5.  

(a) On or after January 1, 2017, and before January
1, 2030, there are exempted from the taxes imposed by this part
the gross receipts from the sale of, and the storage, use, or other
consumption in this state of, any of the following:

(1) Qualified tangible personal property purchased for use by
a qualified person to be used primarily in, at, or on a marine
terminal of a California public port for carriage, handling, or
movement of freight, cargo, and goods.

(2) Qualified tangible personal property purchased for use by
a qualified person to be used primarily to maintain, repair, measure,
or test any qualified tangible personal property described in
paragraph (1).

(b) For purposes of this section:

(1) “Primarily” means 50 percent or more of the time.

(2) “Qualified person” means a person that is a stevedore, marine
terminal operator, operator of a port or freight yard, or any other
person that is engaged in cargo and freight loading, delivery,
movement, storage, and conveyance at or within a California public
seaport.

(3) “Qualified tangible personal property” includes, but is not
limited to, all of the following:

(A) All zero-emission or near-zero-emission equipment used
or required to operate, control, regulate, or maintain the movement
of goods or freight, including, but not limited to, computers,
data-processing equipment, and computer software, together with
all repair and replacement parts with a useful life of one or more
years therefor, whether purchased separately or in conjunction
with the equipment and regardless of whether the machine or
component parts are assembled by the qualified person or another
party.

(B) All marine terminal equipment used in pollution control
that meets standards established by this state or any local or
regional governmental agency within this state and all marine
terminal equipment that exceeds existing standards established by
the state.

(C) Special purpose buildings and foundations used as an
integral part of the process of utilization of zero-emission
equipment or near-zero-emission equipment constitute qualified
tangible personal property to the extent that the sale of, or storage,
use, or other consumption is subject to the imposition of sales or
use tax.

(4) “Zero-emission or near-zero-emission equipment” means
equipment, vehicles, and related technologies used at a California
public seaport that reduce or eliminate greenhouse gas emissions
and improve air quality when compared with conventional or fully
commercialized alternatives, as identified by the State Air
Resources Board in consultation with the State Energy Resources
Conservation and Development Commission. “Zero-emission and
near-Zero-emission equipment” may include, but is not limited to,
enabling technologies that provide a pathway to emissions
reductions, advanced or alternative fuel engines, and hybrid or
alternative fuel technologies for seaport equipment.

(c) An exemption shall not be allowed under this section unless
the purchaser furnishes the retailer with an exemption certificate,
completed in accordance with any instructions or regulations as
the board may prescribe, and the retailer retains the exemption
certificate in its records and furnishes it to the board upon request.

(d) (1) Notwithstanding the Bradley-Burns Uniform Local Sales
and Use Tax Law (Part 1.5 (commencing with Section 7200)) and
the Transactions and Use Tax Law (Part 1.6 (commencing with
Section 7251)), the exemption established by this section shall 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 shall not apply with respect to any tax levied
pursuant to Section 6051.2, or 6201.2, pursuant to Sections 35 and
36 of Article XIII of the California Constitution, or any tax levied
pursuant to Sections 6051 or 6201 that is deposited in the State
Treasury to the credit of the Local Revenue Fund 2011 pursuant
to Sections 6051.15 or 6201.15.

(e) Notwithstanding subdivision (a), the exemption provided
by this section shall not apply to any sale or storage, use, or other
consumption of property that, within one year from the date of
purchase, is removed from California, converted from an exempt
use under subdivision (a) to some other use not qualifying for
exemption, or otherwise used in a manner not qualifying for
exemption.

(f) This section shall apply to leases of qualified tangible
personal property classified as “continuing sales” and “continuing
purchases” in accordance with Sections 6006.1 and 6010.1. The
exemption established by this section shall apply to the rentals
payable pursuant to the lease, provided the lessee is a qualified
person and the tangible personal property is qualified tangible
personal property used in an activity described in subdivision (a).

(g) (1) Upon the effective date of this section, the Department
of Finance shall estimate the total dollar amount of exemptions
that will be taken for each calendar year, or any portion thereof,
for which this section provides an exemption.

(2) No later than each March 1 next following a calendar year
for which this section provides an exemption, the board shall
provide to the Joint Legislative Budget Committee a report of the
total dollar amount of exemptions taken under this section for the
immediately preceding calendar year. The report shall compare
the total dollar amount of exemptions taken under this section for
that calendar year with the department’s estimate for that same
calendar year. If that total dollar amount taken is less than the
estimate for that calendar year, the report shall identify options for
increasing exemptions taken so as to meet estimated amounts.

SEC. 3.  

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