Reclaimers and recycling companies could avoid paying millions of dollars in sales taxes on purchases, under a bill in the California legislature.
Assembly Bill 199 would expand the definition of projects eligible for sales tax exemptions to include that which “primarily processes recycled feedstock that is intended to be reused in the production of another product or utilizes recycled feedstock in the production of another product or soil amendment.”
California’s state and local sales taxes can range from as low as 7.5 percent to as high as 10 percent, depending on local government sales tax add-ons, according to the state Board of Equalization.
The bill supports in-state jobs, helps create a more robust recycling system and benefits the environment by reducing exports of materials overseas, said Teresa Bui, legislative and policy analyst at the nonprofit advocacy group Californians Against Waste, which sponsored the bill.
Under the bill, those seeking an exemption would apply to the California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA), part of the state treasurer’s office.
The tax exemptions “can only be granted if it’s proven that the economic benefit to the region will outweigh the loss to revenues,” said Jacob Roper, spokesman for the California State Treasurer’s Office.
If purchasers can prove that, CAEATFA can exempt them from only the local portion of sales taxes, and they’d still be required to pay the state portion.
The bill does not allow for any retroactive reimbursements from previously made purchases, Bui said.
The bill passed unanimously out of the State Assembly’s Committee on Natural Resources and now heads to the Revenue and Taxation Committee. According to a bill analysis, 36 different local and national organizations are on record supporting the bill, with no registered opposition.
But that doesn’t mean the bill is a shoo-in, Bui said, calling the Revenue and Taxation Committee “a graveyard for many bills.” The committee is set to consider the legislation in May.