Sales and use taxes: exemptions: blood screening testing.
The bill modifies existing tax laws under the Revenue and Taxation Code, specifically creating a targeted exemption for blood screening tests. This change is expected to lower operational costs for blood banks, which may ultimately improve the efficiency and safety of blood testing practices within California. Importantly, however, the legislation does not provide for the reimbursement of local agencies for revenue lost due to these tax exemptions, which may impact local funding sources.
Assembly Bill 607 (AB607) introduces an exemption from sales and use taxes for specific reagents, chemicals, and lab equipment used by nonhospital blood banks to conduct blood screening tests on donated human blood. This legislation aims to encourage blood banks to perform their own testing, enhancing the safety of blood donations in the state of California. The exemption is set to be effective from January 1, 2022, until December 31, 2027, contributing to the operational support of blood banks by reducing their tax liabilities during this period.
The general sentiment surrounding AB607 appears to be positive, especially among healthcare advocates and blood bank operators who welcome initiatives aimed at enhancing public health measures. Supporters argue that the bill will not only incentivize blood banks to increase local testing but also secure a more reliable and faster response capability in case of disasters or health emergencies. However, the lack of provisions for local revenue reimbursement might raise concerns among local governments and entities that rely on tax revenues for essential services.
There have been discussions about the bill's implications for local budgetary constraints, as the state will not provide compensation for the sales tax revenues lost by local agencies due to this exemption. Critics may express concerns about the long-term fiscal effects on local governments, questioning whether the benefits of enhanced blood testing can offset potential funding shortages in other critical areas.