Sales tax holiday bill killed in leg committee

April 15, 2013

By Katy Grimes

Assemblywoman Melissa Melendez has been leading the cause aggressively for a few weeks to give California taxpayers a  sales tax holiday, every tax day.

Under Assembly Bill 718 by Melendez, R-Lake Elsinore, taxpayers would enjoy a one day tax holiday from state sales taxes every year on April 15 – the day taxpayers file their state and federal income taxes.

AB 718 was heard in the Assembly Revenue and Tax Committee Monday. “It makes sense – it’s not once a week, not once a month, it’s nothing outrageous. It’s one day a year,” Melendez said.

“AB 718 would relieve consumers of the state sales tax for a 24 hour period starting on April 15th, 2014 and every year thereafter,” Melendez said. “This will reduce prices, promote consumer spending and stimulate the economy.”

“Rather than focusing on economic stimulus through the means of large government spending from the top down, AB 718 will concentrate stimulus efforts from the bottom up, directly through consumers,” Melendez added.

Tax holiday Grinch

But Revenue and Tax Chairman Assemblyman Raul Bocanegra, D-Pacoima, didn’t appear to agree with Melendez.

“The bill provides broad exemptions for planes, boats and cars,” Bocanegra said. “Are you willing to remove these?”

“Are you asking me to take the big-ticket items off?” Melendez asked.

Bocanegra said his question was just “food for thought,” and not a formal amendment.

But after the hearing, I spoke with Melendez. She was incredulous. “What about people who need to buy a car, or a new washer and dryer?” Melendez asked me. “Or single mothers… my mother used to take us kids to the Laundromat with her. She would have liked to get a break on the purchase of a washer and dryer,” she added.

As we spoke, I calculated the sales tax savings on the purchase on the all-electric Nissan Leaf, costing $18,000. The sales tax savings would be $1,440.

The sales tax savings on a $700 clothes washer would be $60. And the purchase of a $350 Sears Craftsman lawn mower on sales tax day would save the buyer nearly $30.

These are significant savings. Even the wealthy like to save money and could be “stimulated” into making more big-ticket purchases. The sales tax on $200,000 Ferrari would be $16,000 – who wouldn’t want to save $16,000?

But, Melendez said she was particularly frustrated for those who struggle financially, as AB 718 would have helped them greatly.

“Today’s proceedings are just another example of how out of touch Sacramento Democrats are with California’s middle class, working families,” said Melendez at a press conference after the hearing. “Taxpayers and small businesses throughout California deserve a breather from back breaking taxes and regulations. If Sacramento Democrats don’t want to change our complicated tax code while continuing to put more burdens on taxpayers, the least they could do is help people out for one day a year. I am very disappointed with the lack of leadership from Democrats today.”

The bill was sent to the suspense file, which means it’s pretty much dead. Everyone at the Capitol knows there’s no suspense about a suspense file.