SENIOR SENATE PROPOSAL NO. 2

INTRODUCED BY SENIOR SENATOR ERVEN

LEGISLATIVE COUNSEL'S DIGEST

SP 2: GOODS AND SERVICES TAX.

THE PERSONAL INCOME TAX LAW IMPOSES SPECIFIED TAXES FOR EACH TAXABLE YEAR UPON THE ENTIRE TAXABLE INCOME OF EVERY RESIDENT OF THIS STATE. THE SALES AND USE TAX LAW IMPOSES A TAX ON THE GROSS RECEIPTS FROM THE SALE OF, OR THE STORAGE, USE, OR OTHER CONSUMPTION IN THIS STATE OF, TANGIBLE PERSONAL PROPERTY, AND PROVIDES VARIOUS EXEMPTIONS FROM THAT TAX.

THIS MEASURE WOULD MEMORIALIZE THE LEGISLATURE AND THE GOVERNOR TO ENACT LEGISLATION THAT WOULD DIRECT THE FRANCHISE TAX BOARD, STATE BOARD OF EQUALIZATION, TREASURER, AND CONTROLLER TO FORM AN INVESTIGATIVE COMMITTEE TO DETERMINE IF A GOODS AND SERVICES TAX PLAN IS FEASIBLE IN CALIFORNIA, AND IF SO, TO GAIN THE ASSISTANCE OF THE LEGISLATIVE COUNSEL TO DRAFT A MEASURE TO BE PRESENTED TO THE CITIZENS OF CALIFORNIA FOR ADOPTION.

VOTE: MAJORITY.

SP 2: RELATING TO GOODS AND SERVICES TAX

WHEREAS, THE STATE INCOME TAX RELIES UPON THE INDIVIDUAL TAXPAYER TO PREPARE AND FILE FORM 540 ALONG WITH THE PAYMENT OF TAX DUE; AND

WHEREAS, IF THE TAXPAYER IS DUE A REFUND, THE CONTROLLER MUST PREPARE A REFUND CHECK AND MAIL IT TO THE TAXPAYER AT STATE EXPENSE; AND

WHEREAS, UNDER THE CURRENT TAX CODE, THERE ARE A GREAT MANY EXEMPTIONS FOR THE APPLICATION OF SALES TAX, WHILE UNDER THE GOODS AND SERVICE TAX (GST) IN CANADA, THERE ARE LIMITED EXEMPTIONS, PURSUANT TO CANADIAN STATUTES; AND

WHEREAS, UNDER THE CANADIAN GST, THE TAX APPLIES TO THE SALE OF EVERYTHING, WITH LIMITED EXEMPTIONS PURSUANT TO CANADIAN STATUTES; AND

WHEREAS, UNDER THE CANADIAN GST, PERSONAL SERVICES ARE TAXED, WITH LIMITED EXEMPTIONS PURSUANT TO CANADIAN STATUTES; AND

WHEREAS, A FLAT 5 PERCENT GST WILL BE SUFFICIENT TO OFFSET THE 7.25 PERCENT TO 8.75 PERCENT SALES TAX PRESENTLY CHARGED THROUGHOUT CALIFORNIA; AND

WHEREAS, ALL CITIZENS AND VISITORS MUST REALIZE THAT SUFFICIENT FUNDS MUST BE GENERATED TO PROVIDE NEEDED FUNDS FOR MANDATED PROGRAMS AND RECREATIONAL FACILITIES FOR THE GOOD OF ALL CALIFORNIA CITIZENS WITHOUT INCREASING PRESENT TAXES; AND

WHEREAS, THE GST, PER SE, IS NOT A NEW TAX, BUT AN EXPANSION OF THE CURRENT SALES TAX THAT APPLIES TO ALL SALES TRANSACTIONS AND EXPANDS THAT TAX INTO THE ARENA OF PERSONAL SERVICES THAT CURRENTLY CREATES NO REVENUE TO PAY FOR SERVICES AND BENEFITS THAT THOSE PRACTITIONERS ENJOY TODAY; NOW, THEREFORE, BE IT

RESOLVED, BY THE SENIOR SENATE AND THE SENIOR ASSEMBLY, JOINTLY, THAT THE SENIOR LEGISLATURE OF THE STATE OF CALIFORNIA AT ITS 2008 REGULAR SESSION, A MAJORITY OF THE MEMBERS VOTING THEREFOR, HEREBY PROPOSES THAT THE LEGISLATURE DIRECT THE FRANCHISE TAX BOARD, STATE BOARD OF EQUALIZATION, TREASURER, AND CONTROLLER TO FORM AN INVESTIGATIVE COMMITTEE TO DETERMINE IF A GST PLAN IS FEASIBLE IN CALIFORNIA, AND, IF SO, TO GAIN THE ASSISTANCE OF THE LEGISLATIVE COUNSEL TO DRAFT A MEASURE TO BE PRESENTED TO THE CITIZENS OF CALIFORNIA FOR ADOPTION; AND BE IT FURTHER

RESOLVED, THAT THE SENIOR LEGISLATURE OF THE STATE OF CALIFORNIA RESPECTFULLY MEMORIALIZES THE LEGISLATURE AND THE GOVERNOR OF THE STATE OF CALIFORNIA TO ENACT APPROPRIATE LEGISLATION THAT WOULD ADDRESS THE CONCERNS SET FORTH IN THIS MEASURE; AND BE IT FURTHER

RESOLVED, THAT A COPY OF THIS MEASURE BE TRANSMITTED TO THE PRESIDENT PRO TEMPORE OF THE SENATE, THE SPEAKER OF THE ASSEMBLY, AND THE GOVERNOR OF THE STATE OF CALIFORNIA.

RN 08 22122

- 0 -