Passing New Local Taxes Easier If Pending Proposals Become Law
(August 27, 2013) Two “job killer” proposals to amend the California Constitution to make it easier for local governments to impose new local taxes will be considered by a Senate policy committee today.
The California Chamber of Commerce opposes SCA 4 (Liu; D-La Cañada Flintridge) and SCA 8 (Corbett; D-San Leandro), which lower the vote requirement for tax increases and will likely lead to taxes specifically targeting employers.
Both proposals add complexity and uncertainty to the current tax structure and pressure to increase taxes on commercial, industrial and residential property owners for local transportation projects by giving local government new authority to enact special taxes, including parcel taxes, by lowering the vote threshold from two-thirds to 55%.
The CalChamber’s primary concern with SCA 4 and SCA 8 is that they provide blanket authority to the local government to impose nearly any type of “special tax” with a reduced voter threshold of only 55%.
There are few parameters or restrictions under which a “special tax” may be imposed, other than the revenue must be used for local transportation projects and the “special tax” cannot be an ad valorem or transaction tax on real property.
With such broad discretion in the type or scope of “special tax” to impose, the CalChamber is concerned that it could lead to targeted taxes at the local level against unpopular taxpayers, industries, products, or property.
Specifically, under both proposals, a parcel tax could be disproportionately directed at commercial property within the local jurisdiction, thereby potentially undermining the protections in place under Proposition 13 and discriminating against commercial property versus residential.
Similarly, a special sales tax could be imposed solely on sweetened beverages or high-calorie items.
Although the CalChamber appreciates the current financial pressure many cities, counties or special districts are under to maintain funding levels for important services, such as transportation, the CalChamber does not believe it is proper to amend the Constitution to reduce the level of local voter approval necessary to impose nearly any type of special tax.
The current two-thirds vote requirement for special taxes provides a mechanism by which voters still can approve tax increases while protecting the interests of a small minority of taxpayers.
The business community consistently maintains that if a tax is necessary, it should be only temporary and broad based so that the impact is minimized as it is uniformly shared by all instead of an individual business, industry, or taxpayer.
By reducing the voter threshold to impose nearly any type of “special tax” at the local level with only a majority vote, SCA 4 and SCA 8 increase the threat of unfair and economically harmful targeted taxes.
The CalChamber is urging members of the Senate Transportation and Housing Committee to oppose SCA 4 and SCA 8.