California Sales Tax Repealed?

[Anthony]

I heard that Governor Schwartzeneger repealed or cut or
stopped sales tax in California; and I was wondering if this
was true?

If this is true, was it across the board sales tax cut or
just on certain items? Was it for a certain limited time?

 

[Paul A Thomas]

I heard that Governor Schwartzeneger repealed or cut or
stopped sales tax in California; and I was wondering if this
was true?

I doubt it. The state NEEDS the money.

What was reduced was the "car" tax (whatever that was).

 

[A.G. Kalman]

I heard that Governor Schwartzeneger repealed or cut or
stopped sales tax in California; and I was wondering if this
was true?

If this is true, was it across the board sales tax cut or
just on certain items? Was it for a certain limited time?

The Governor has no authority to repeal sales taxes. Upon
taking office, he signed an order that restored the vehicle
license fee (VLF) to .65% of a vehicle's value retroactive
to 10/1/03 the day it went up to 2%. It is way too
complicated to explain how it is possible that two different
governors can raise and lower the VLF.

 

[Ernie Klein]

I heard that Governor Schwartzeneger repealed or cut or
stopped sales tax in California; and I was wondering if this
was true?

If this is true, was it across the board sales tax cut or
just on certain items? Was it for a certain limited time?

He turned back the increase in the Vehicle License Fee (VLF)
which had been tripled by the Legislature and Gov. Davis.
The VLF is that part of the vehicle registration fee that is
based on the value of the vehicle, thus a property tax, and
as such, is deductible from Federal taxes. This has nothing
to do with sales taxes.

--
-Ernie-

"There are only two kinds of computer users -- those who have
suffered a catastrophic hard drive failure, and those who will."

Have you done your backup today?

 

[Katie Jaques]

I heard that Governor Schwartzeneger repealed or cut or
stopped sales tax in California; and I was wondering if this
was true?

If this is true, was it across the board sales tax cut or
just on certain items? Was it for a certain limited time?

As others have said, it wasn't the sales tax, it was the
"car tax" that was affected. The car tax is an annual ad
valorem property tax on the value of motor vehicles that is
paid to the DMV along with the annual registration fee. The
revenue does not go to the state general fund, but is
distributed back to local governments (cities, counties,
etc.) and is a significant source of their revenue.

Just for clarification: the previous administration did NOT
"triple" the car tax. The car tax was gradually reduced
over a period of years by two-thirds, from 2% to .67% of
assessed value. The law that reduced the tax also provided
that the state would reimburse ("backfill" the local
governments for the lost revenue. It also provided that if
certain revenue targets were not met in future years, the
tax would revert to its original rate. In other words, this
is a tax cut we can afford to make now, but if conditions
change for the worse, it will automatically reverse itself.
Those targets were not met this year and the tax
automatically, according to statute, went back to 2%. The
Legislature could have enacted a law in 2003 repealing the
reversion statute, but chose not to do so, and the previous
Governor's proposed budget assumed that the state would no
longer need to backfill the local governments' revenue loss
from the reduced tax. However, there was no new law in 2003
"tripling" the car tax. It simply went back to its historic
rate in accordance with the law.

It isn't clear to me how the present Governor could change
the law by executive order, but everyone seems to agree that
his action was not illegal.

Katie in San Diego

The foregoing is intended for educational purposes only and
does not constitute legal or professional advice.

 

[A.G. Kalman]

(e-mail address removed) (Anthony) wrote:

As others have said, it wasn't the sales tax, it was the
"car tax" that was affected. The car tax is an annual ad
valorem property tax on the value of motor vehicles that is
paid to the DMV along with the annual registration fee. The
revenue does not go to the state general fund, but is
distributed back to local governments (cities, counties,
etc.) and is a significant source of their revenue.

Just for clarification: the previous administration did NOT
"triple" the car tax. The car tax was gradually reduced
over a period of years by two-thirds, from 2% to .67% of
assessed value. The law that reduced the tax also provided
that the state would reimburse ("backfill" the local
governments for the lost revenue. It also provided that if
certain revenue targets were not met in future years, the
tax would revert to its original rate. In other words, this
is a tax cut we can afford to make now, but if conditions
change for the worse, it will automatically reverse itself.
Those targets were not met this year and the tax
automatically, according to statute, went back to 2%. The
Legislature could have enacted a law in 2003 repealing the
reversion statute, but chose not to do so, and the previous
Governor's proposed budget assumed that the state would no
longer need to backfill the local governments' revenue loss
from the reduced tax. However, there was no new law in 2003
"tripling" the car tax. It simply went back to its historic
rate in accordance with the law.

It isn't clear to me how the present Governor could change
the law by executive order, but everyone seems to agree that
his action was not illegal.

I think the actual scenario worked as follows:

There was ambiguity in the law that lowered the rate and
then specified the rate increase if certain events happened.
The ambiguity was in the criteria for restoring it to 2% and
the process to restore it. Gov. Davis and his Dir. of
Finance declared the criteria met and let the tax go up to
2%. The new governor decided that they were in error in how
they interpreted the statute. He then rescinded the letter
from the Director of Finance that stated the criteria had
been met. So..., I suppose you can say that he didn't lower
the tax unilaterally. He just informed the DMV that they
had no authority to increase it from .65% and ordered them
to refund any excess tax collected.

You can read the Executive Order at:
If you can't decode the url, you can find the link right on
the DMV homepage: http://www.dmv.ca.gov/

 

[Stuart O. Bronstein]

Just for clarification: the previous administration did NOT
"triple" the car tax. The car tax was gradually reduced
over a period of years by two-thirds, from 2% to .67% of
assessed value. The law that reduced the tax also provided
that the state would reimburse ("backfill" the local
governments for the lost revenue. It also provided that if
certain revenue targets were not met in future years, the
tax would revert to its original rate. In other words, this
is a tax cut we can afford to make now, but if conditions
change for the worse, it will automatically reverse itself.
Those targets were not met this year and the tax
automatically, according to statute, went back to 2%. The
Legislature could have enacted a law in 2003 repealing the
reversion statute, but chose not to do so, and the previous
Governor's proposed budget assumed that the state would no
longer need to backfill the local governments' revenue loss
from the reduced tax. However, there was no new law in 2003
"tripling" the car tax. It simply went back to its historic
rate in accordance with the law.

It isn't clear to me how the present Governor could change
the law by executive order, but everyone seems to agree that
his action was not illegal.

I have not read the legislation, but apparently the
reimposition of tax is not automatic. Someone has to
trigger it by making a determination that it's warranted.
If the governor decides that it wasn't, in fact, warranted,
the increase could be rolled back.

I imagine that a court could overrule the governor, and the
local governments had threatened to sue, if they did not
already. That's probably a good part of the reason that the
state agreed to repay the locals for money lost due to the
governor's decision.

Stu