Sales and Use Tax Law: exemption: over-the-counter medication.
The bill will specifically alter the structure of sales and use taxes as they relate to purchases of over-the-counter medications in California. Under current law, retailers are taxed based on their gross receipts from sales, which can affect the pricing of consumer items, including necessary health products. This legislative change intends to reduce that financial burden on consumers, who may otherwise have to pay additional taxes on lifesaving or health-related medications.
Assembly Bill 2006, introduced by Assembly Member Mathis, aims to exempt certain over-the-counter medications from state sales and use taxes until January 1, 2030. This exemption is designed to create parity between taxes applied to prescription medications and those applied to over-the-counter products, potentially lowering costs for consumers purchasing nonprescription drugs. The specific medications included are defined to conform with the regulations set forth by the FDA under the federal Food, Drug, and Cosmetic Act.
Opponents of the bill may argue that while the exemption is beneficial to consumers, it could affect local government revenues since the exemption does not apply to local sales and use taxes. The measure preserves existing local tax laws, which means local governments may continue to impose sales taxes on these transactions. Thus, the anticipated savings for consumers could have a limited impact on overall public health expenses, and considerations around funding public services may arise as a point of contention.