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You’ve likely heard that in November California voters approved higher sales and income taxes. But there’s another tax hike taking effect Jan. 1 that may catch many Californians by surprise.
Late this summer — even before the recent election — two‐ thirds of the Legislature approved and the governor signed legislation imposing a new “Lumber Products Assessment” on certain retail sales.
That might sound straightforward enough, but it’s not.
Although some products containing wood will be taxed, others will not. Going forward, an elected bureaucrat at the Board of Forestry and Fire Protection will have the authority to unilaterally add or remove products from the list of taxable items annually. This power to declare items taxable is likely to create a constantly changing answer to the critical question, “What’s a taxable lumber product?”
Items subject to the tax must contain at least 10 percent primary wood content. Examples include, but are not limited to, lumber, plywood particle board, poles, posts, structural panels, decking, railings, fencing (poles, solid board), roofing (shakes and wooden shingles), siding and sub‐flooring.
Items clearly not within the scope of the tax are “secondary wood products” where additional labor has added significant value to the product, including furniture, firewood, paper products, windows and doors.
Businesses that sell taxable lumber products are hurrying to reprogram their registers to calculate the higher rate on these sales, which one trade group estimated would have an average cost of $4,500 per business location. The new law specifically allows retailers to be reimbursed for costs to set up collection systems, which is a reasonable way of making it less expensive for businesses that collect taxes on behalf of the state of California.
However, during our October meeting, the Board of Equalization voted — I was strongly opposed — to limit the reimbursement to $250 per location for the estimated 60,000 businesses that will need to update their computer systems to collect the new lumber tax. At the same time, the board voted to request nearly $1 million in order to update its own computer systems to implement this new tax. I noted, “I’m a little embarrassed that we are not afraid to ask for our full reimbursement for costs, but we’re not willing to ask for full reimbursements for businesses in California.”
Rather than cooking up complicated new taxes and fees, the California Legislature ought to start spending its time finding ways to help California job creators succeed. If a new tax is expensive for the Board of Equalization to implement, you can bet it’s a costly headache for California business owners as well. And in this economy, the last thing Californians need is another tax.
Elected in November 2010, George Runner represents more than 9 million Californians as a member of the State Board of Equalization. For more information or assistance, visit boe.ca.gov/Runner.
To learn more about the Lumber Products Assessment, visit boe.ca.gov/industry/lumber_products.html.
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EvelynDecember 22, 2012 - 7:02 pm
George Runner writes articles about stuff we need to know. (My 6th grade schoolteacher - my aunt, a stickler - told us there was no such thing as "stuff". But now I'm not in the 6th grade, so ......) Mr Runner is telling us about another CA tax hike, effective Jan. 1. I'm reminded of an article I read this morning - 55 REASONS WHY CALIFORNIA IS THE WORST STATE IN AMERICA. A sampling of the 55: 1. One survey of business executives has ranked California as the worst state in America to do business for 8 years in a row. 2. In 2011, the state of California ranked 50th out of all 50 states in new business creation. 3. According to one recent study, California is the worst-governed state in the entire country. 4. Thanks to Proposition 30, California now boasts the highest state income tax rate in the nation. 6. California has the highest sales tax rate in the United States. 7. California has the 8th highest corporate income tax rate in the country. 10. California is the only state in America that taxes carbon emissions. 11. The state of California issues some of the most expensive traffic tickets in the nation. 14. The state of California requires licenses for 177 different occupations (the most in the nation). The national average is only 92. 15. California teachers are the highest paid in the nation, but California students rank 48th in math and 49th in reading. 19. Average pay for California state workers has risen by more than 100 percent since 2005. That is good news for those state employees, but it is bad news for the taxpayers that have to pay their salaries. 23. Since 2007, the number of children living in poverty in the state of California has increased by 30 percent. 25. The American Tort Reform Association has ranked the state of California as the worst "judicial hellhole" in America. 26. Businesses all over the state of California are being absolutely suffocated to death by ridiculous regulations. 26. Businesses all over the state of California are being absolutely suffocated to death by ridiculous regulations. ********** If you want the full list, go to http://tinyurl.com/b7up2wz ********** It is possible to consider information such as this and believe THEY WANT THE STATE TO FAIL. The question is: WHY?
EvelynDecember 22, 2012 - 7:07 pm
For reasons obvious, I meant (above) to highlight this one, so I'm giving myself a 2nd chance: 25. The American Tort Reform Association has ranked the state of California as the worst "judicial hellhole" in America.
James E.December 22, 2012 - 7:27 pm
*** index. Evelyn, that depends on which side you are on concerning tort reform. Tort reform meaning changing the law restricting the right to sue or limiting the amount of damages. Big corporations scream for tort reform so they can damage people without being accountable. So, if California is a judicial hellhole for tort reform, then that's good if you believe that corporations/people should be responsible when they harm others.
James E.December 22, 2012 - 7:32 pm
Ah, California the golden state -- bring me men/women to match my mountains. So much "stuff" to enjoy.
EvelynDecember 22, 2012 - 7:48 pm
Big corporations DO damage people. HUGELY. Mostly they are not held accountable.
cookie65January 02, 2013 - 7:59 am
New California Tax Targets _________ (fill in the blank).
cookie65January 02, 2013 - 8:08 am
James, concerning your half-truth regarding tort reform. Another version popular among anyone interested in putting a damper on frivolous lawsuits and the alternative version of winning the lottery. Not to mention the love affair environmental groups have with the laws as they currently stand. It is actually quite simple. It simply says that if you file a lawsuit against a person or entity and lose, you pay for the defendents legal costs. In no way does it prevent you from holding another party or parties responsible for punitive or criminal damages.
Steven FrischJanuary 02, 2013 - 8:12 am
Seriously Mr. Runner, I wish you had posted the source of the "$4,500" per business figure. This should be no more than a simple matter of changing the programming in cash registers and/or updating a computerized inventory or point of sale system to ensure that the taxed products are labeled appropriately. The cost of reporting on one's quarterly sales tax filing is less than marginal, it is one line that needs to be filled in. In cases where a seller does not use a computerized system its really no different than what they are doing now, calculating tax based on a printed chart.
cookie65January 02, 2013 - 8:14 am
Evelyn, allow me to add one more to the list. California has the 3rd highest gas tax in the nation, more cars than most other states combined while enjoying the worst roads in the country. I believe I have mentioned to you before that by the time they pay for the bureaucracies, pensions and healthcare there is no money left over for the roads. And James call that type of observation unrational.
EvelynJanuary 02, 2013 - 8:51 am
Steven Frisch, over time I've learned that Mr. Runner doesn't make up information. So I reckoned the answer to your question must be findable, if only I looked. The SOURCE you ask for is HERE (pg. 15, submission to State Bd. of Equalization from West Coast Lumber & Building Material Assoc).
EvelynJanuary 02, 2013 - 8:53 am
Did it again! Bad link (above). Try this: http://www.boe.ca.gov/meetings/pdf/2000IDPweb.pdf
EvelynJanuary 02, 2013 - 9:19 am
About that (above) list posted Dec 22, 2012 - 7:02 pm - One of many that I didn't mention was: "9. California is tied with New York for the highest gasoline tax rate in the country." (This is NOT a quibble about whether we have the privilege of being tied for 1st or are ONLY in 3rd place! Rather, I'm supporting your statement.)
Jim RiordanJanuary 03, 2013 - 11:40 am
Wish we had a bunch more George Runners sitting on EVERY putrid government Agency in our otherwise great state. Thanks from the heart George. The SBOE is full of more pushy, unknowing, rude idiots than any other state agency I know of. As a Fed Trustee on criminal BK cases I had many run-ins over years with unknowing would be little Gods trying to push me around. I was a "civilian" Federal player in their State ball park. Which is to say I exercised Fed-level control over certain businesses in this state. They hated that. Every time I called their offices, I was placed on hold, sometimes for 20 minutes at a time. Finally I would leave a message and hang up. Then, when they called back, I would have my secretary alert me to answer my phone after the same "hold time" had been achieved. Invariably, they would ask in a sarcastic tone, "do you know how long I have been on hold?" My answer would be, "I know precisely. It was exactly as long as I was left on hold at your office which is the way it will be every time when you call mine." Thanks for being there for us Mr. Runner.