Sales and Use Tax Law: motor vehicle fuel tax: sales price: gross receipts.
If enacted, SB 1086 would change the calculation method for sales and use taxes on motor vehicle fuel. By excluding the motor vehicle fuel tax from the gross receipts and sales price, it effectively reduces the taxable base for these transactions. Supporters of the bill argue that this could help lower costs associated with fuel taxes for businesses that sell motor vehicle fuel as they will not be taxed on the total fuel tax amount they must collect on sales. This could potentially lead to lower prices for consumers at the pump.
Senate Bill 1086, introduced by Senator Seyarto on February 12, 2024, aims to amend Sections 6011 and 6012 of the Revenue and Taxation Code, specifically relating to the Sales and Use Tax Law and the Motor Vehicle Fuel Tax. The primary intention behind this legislation is to exclude from the terms 'gross receipts' and 'sales price' the amount of any motor vehicle fuel tax imposed under existing law, starting from January 1, 2025. This development is part of a broader initiative to streamline how taxes on motor vehicle fuel are calculated within California's existing tax framework.
Though the bill has support, it may also face criticism regarding its fiscal implications. Opponents might argue that eliminating the inclusion of motor vehicle fuel taxes from taxable amounts may reduce state revenue that is significant for maintaining road infrastructure and funding transportation projects. The discussions around SB 1086 are likely to focus on balancing business interests with the sustainability of state funding for public services related to transportation and infrastructure.
Senate Bill 1086 had its first hearing on April 10, 2024. During this session, it was noted that the bill received unanimous support, passing through the committee with 7 votes in favor and none against. However, it faced further scrutiny, as reconsideration has been granted after its initial failure in committee, indicating the potential for ongoing debates surrounding the bill's implications.