California Assembly Bill AB543

California 2023-2024 Regular Session

• Introduced: 2/8/23
• Refer: 2/17/23
• Refer: 3/14/23
• Report Pass: 4/24/23
• Refer: 4/25/23
• Report Pass: 5/2/23
• Refer: 5/2/23
• Refer: 5/17/23
• Report Pass: 5/18/23
• Engrossed: 5/25/23
• Refer: 5/26/23
• Refer: 6/7/23
• Report Pass: 7/6/23
• Refer: 8/14/23
• Refer: 7/6/23
• Report Pass: 9/1/23
• Enrolled: 9/11/23
• Chaptered: 10/8/23
• Passed: 10/8/23

Caption

Sales and Use Tax Law: exemptions: petroleum products: water common carriers.

Impact

The legislative alterations proposed by AB543 directly impact local tax revenues. By denying state reimbursement for sales tax losses incurred by local agencies due to this tax exemption, the bill creates a scenario where municipalities may need to adjust their budgeting and financial planning in anticipation of reduced local tax income. The goal is to bolster the maritime fuel economy in California and ensure competitive pricing relative to other ports, benefitting local businesses that depend on common carriers.

Summary

Assembly Bill 543, also known as AB543, amends Section 6385 of the Revenue and Taxation Code to extend existing sales and use tax exemptions for petroleum products sold to water common carriers. The bill specifically allows sales tax exemptions on purchases of fuel that are intended for immediate shipment out of state, aimed at supporting the operational needs of common carriers transitioning cargo after the first point outside of California. Originally scheduled for repeal on January 1, 2024, this exemption is now extended for an additional five years until January 1, 2029.

Sentiment

Differing viewpoints around AB543 are evident among legislators. Supporters argue that the proposed extension is vital for maintaining California's competitiveness in the maritime fuel market, especially in light of fluctuating fuel prices. Critics express concerns about the implications of the bill on local governments and their financial independence, with fears that it limits community capacity to adapt to local economic needs, thereby reducing the effectiveness of local governance.

Contention

Key debates centered on AB543 include the tension between state-imposed tax policies and local revenue autonomy. Opponents warn that the bill could undermine necessary local services funded by sales tax revenues, while supporters emphasize the need to streamline operations for common carriers crucial to California's economy. Additionally, the bill mandates performance assessments to ensure the exemption's intended economic impacts are realized, running the risk of future legislative alterations if performance indicators do not meet expectations.