A tax in sheep’s clothing

Sept. 6, 2012

By Katy Grimes

A standard of the Republican Party platform is “no new taxes and less regulation.” But last week, at the very end of the two-year legislative session, the Legislature was faced with a bill containing a $2.3 billion car tax increase. For now, it didn’t pass. But it had Republican votes.

Senate Bill 1455, by Sen. Christine Kehoe, D-San Diego, would extend the extra fees on vehicle registrations, boat registrations, smog surcharges, and tire sales until 2023,  in order to fund environmental state programs for production, distribution, and sale of alternative fuels, green vehicle technologies, and carbon emissions reduction plans.

Billed as an environmentally-friendly bill, SB 1455 was gutted and amended, the tax increase surprisingly materialized only last week, and the bill received only one policy hearing. The Howard Jarvis Taxpayers Association warned, “the regulatory relief can be altered in the future by a majority vote, while this tax extension against vehicle owners will last another decade.”

SB 1455 would have increased taxes on vehicles and tires over eight years, and extended “various fees and surcharges related to the clean air, fuel, tire recycling, and vehicle programs of the Air Resources Board , the California Energy Commission, the Department of Resources Recycling and Recovery, and the State Bureau of Automotive Repair.”

“The defeat of this bill and the struggle to not support it, should be held up as an illustration of both the seriousness of the economic malaise that will continue in California if regulations are not curtailed, and the importance of elections,” Assemblywoman Diane Harkey, R-Laguna Niguel, wrote in the Orange County Register earlier this week.

Tax fighter Grover Norquist called SB 1455 “one of the most surreptitious legislative maneuvers in the country.”

Both Norquist and Harkey are right; this Democratically-controlled Legislature is both surreptitious and negligent.

Californians are struggling mightily under some of the highest unemployment in the country, highest income taxes, high property and sales taxes, and more regulations on business than in any other state.

It is not only “unconscionable that some lawmakers see fit to continue to pile on with the same type of job-killing tax increases that got the state into its current economic mess,” as Norquist said; it is pure, political and ideological negligence.

Guarding the wall

If Republicans won’t even vote against tax increases, should they represent constituencies as Republicans? (Ahem, Assembly members Olsen, Achadjian, Smyth and Nathan Fletcher, now registered as an Independent.)

“SB1455 was surprisingly supported by almost every employer group in California, including agriculture, truckers, oil refiners, delivery services and manufacturers,” Harkey explained. And she reported, “Republicans were lobbied nonstop.”

While most realize that businesses cannot survive even one more tax, support for SB 1455 appeared to be extended by businesses which could pass the tax off onto consumers–oil, agriculture, and trucking.

But after eleventh-hour meetings where Republican staff were able to peel back the layers of SB 1455, “Many discovered that most of the $2.3 billion in taxes and fees would actually go to support more regulation, government central planning and subsidies for favored industries,” Harkey said.

However, as a tax increase, SB 1455 required a two-thirds vote; Republican votes were needed to pass the bill.

In the Assembly, SB 1455 passed 55-21. But the Senate leaned the other way, with a couple of Democrats voting no, two Republicans voting in favor of the bill, and five Senators abstaining. Interestingly, it was Democratic Senators Lou Correa, D-Santa Ana, and Rod Wright, D-Inglewood, who boldly prevented passage of SB 1455.

SB 1455 detail

Here is why taxpayers should be furious about SB 1455:

* Existing law, until January 1, 2016, establishes vehicle registration fees of $34, vessel registration fees of $20 and of $40, as applicable, and specified service fees for identification plates of $20.

* It imposes smog abatement fees of $20, and requires a specified amount of those fees be deposited in the Air Quality Improvement Fund and in the Alternative and Renewable Fuel and Vehicle Technology Fund. SB 1455 would extend those fees.

* Existing law authorizes the Sacramento Metropolitan Air Quality Management District board to adopt a $4 surcharge on motor vehicle registration fees applicable to all motor vehicles registered in the counties within the district.

This bill would add $2 to the surcharge and extend the $6 limitation on the surcharge until December 31, 2023, with the limit returning to $4 beginning on that date.

* Existing law imposes a California tire fee amount on every person who purchases a new tire, with the revenues generated to be allocated for prescribed purposes related to disposal and use of used tires. Existing law, until January 1, 2015, raises the limit on the tire fee to $1.75 and requires that 75¢ per tire on which the fee is imposed, be deposited in the Air Pollution Control Fund for use by the state board and districts for specified purposes. Beginning January 1, 2015, existing law returns the tire fee limit to 75¢.

This bill would extend the $1.50 limitation on the tire fee until December 31, 2023, with the limit returning to 75¢ on that date.

A tax in sheep’s clothing

“This bill would include a change in state statute that would result in a taxpayer paying a higher tax,” the bill’s language states. SB 1455 is a tax.

Republicans were asked to stand strong in favor of $2.3 billion in additional car taxes for eight additional years and much more regulation.

But this really bad bill is bad policy that corrects nothing. And it is something that will eventually be paid by consumers and taxpayers.

While the Flash Report’s Jon Fleishman said that the bill did offer some regulatory releases for a few businesses burdened under particularly onerous AB 32 regulations, of even more concern is the ongoing practice of forcing Republicans to provide regulatory relief for one group of people by passing taxes and fees on another group of people.

And that is the problem with phony “reforms” passed in California–they are always taxes in sheeps’ clothing.