Sen. Elaine Alquist is sponsoring bill that could cost state $3
billion a year
Gilroy – A bill that would exempt business transactions from the state portion of sales tax is being sponsored by State Sen. Elaine Alquist, D- San Jose.
“There is a desire on the part of Senator Alquist to make sure that Silicon Valley has a complete and speedy economic recovery,” said Alquist spokeswoman Sailaja Cherukuri. “The number one thing our Silicon Valley CEOs say is that you cannot think of California in a vacuum if you want to stay competitive with other states as well as globally. You need to have some rationality in the tax code.”
The bill, SB 1291 is a follow up to SB 552, a similar piece of legislation introduced last year by Alquist, whose district includes Gilroy. It would exempt business transactions from the 6 percent portion of sales tax that goes to state coffers. The 2 percent portion reserved for county agencies would be untouched.
Cherukuri said Californians are overtaxed by a system that charges tax on equipment purchases, the building of new facilities and the sale of products. She said it makes more sense to exempt businesses from tax because the savings will improve the area’s job market.
“We are still working out an amendment so we have a meaningful job creation requirement,” Cherukuri said. “It is a balancing act, but if we don’t keep our job creators here there won’t any tax base to pay for [social service programs]. It’s a macro economic argument that a robust hi-tech sector will lead to a more robust economy for everyone.”
Other local representatives have not taken a position on the bill. Last year’s version, SB 552, was co-sponsored by Republican Sen. Abel Maldonado, whose district includes Morgan Hill. An aide to Maldonado said the new bill is not a priority this year.
Assemblyman John Laird, D-Santa Cruz, said he has not had a chance to review the legislation.
The Department of Finance has estimated that the bill would cost the state about $3 billion a year.
