Sales tax repeal bill set for April 29 — publisher action requested

Legislation introduced by Assemblyman Marc Levine (D-Marin County) to repeal the sales tax on newspapers will be heard by the Assembly Revenue and Taxation Committee on Monday, April 29. Pursuant to the committee’s procedures, at the bill’s first hearing AB 1776 will be introduced by the author to the committee and testimony will be taken, but no final vote will occur that day. The bill, which creates a “tax expenditure,” will be placed on the committee’s suspense file and a final vote to approve or hold the bill will happen at a later date when the committee reviews all the suspense bills simultaneously.

Now is the time to contact members of the committee (listed below) to urge their favorable consideration of AB 1776. Staff has created these talking points in support of the measure for members’ use in communicating with lawmakers and for newspapers’ editorial use.

Staff has also drafted this sample letter. (Word document download)

  • Californians’ right to know is enshrined in Article One, Sec. 3, (b)(1) of the State’s Constitution. It says “The people have the right of access to information concerning the conduct of the people’s business.” Printed, published and distributed California newspapers continue to uphold this ideal by employing journalists in local communities to gather and report news about all manner of local, regional and state issues.
  • California newspapers inform the public and therefore increase civic literacy and public participation in self-government.
  • Newspapers were exempted from sales tax from the enactment of the general sales tax in the 1930s until 1990. All newspapers became taxed that year when, faced with an unprecedented $8 billion budget deficit, the legislature adopted a budget proposed by then-Gov. Pete Wilson that imposed a sales tax on four previously exempt products: bottled water, candy and snack foods, newspapers and periodicals, and bunker fuel (stored fuel).
  • Since 1990, the tax on newspapers has been whittled down by subsequent legislation and regulation. Freely distributed, scholastic and religious newspapers are exempt; the distribution of most weekly newspapers is exempt; the digital portion of a mixed print and digital subscription is exempt. What’s left is a tax on a tiny minority of First Amendment Speakers. The tax on newspapers today creates very little revenue for the state — $13.5 million/yr. — a minuscule percentage of Gov. Newsom’s $209 billion spending plan). The tax continues to create substantial burdens on newspapers and on newspaper readers.
  • The sales tax continues to apply to a relatively small number of businesses engaged in activities protected by the First Amendment — all daily newspapers and certain weekly newspapers — while virtually every other content creator and aggregator competing for the same audiences and advertising dollars is untaxed, including broadcast television and radio and digital aggregators of information, such as Facebook and Google.
  • Application of the sales tax on newspapers penalizes news companies that employ journalists in California communities, who gather news, inform the public and serve their communities, while that tax policy benefits businesses that don’t create anything, but instead aggregate and re-distribute the high-quality content created by newspapers.
  • Ironically, the tax continues to be levied on the print products of the only business set out for special protection in the Bill of Rights — The Press.
  • Unlike the aggregators and re-distributors of digital content, California newspapers are responsible for the content they create and publish. Newspapers and the journalists that work for them subscribe to journalistic principals and a code of ethics. Unlike newspapers, digital platforms exempted from California sales tax profit from the posting of nearly anything without the concomitant responsibility born by content creators. Washington Post reporter Drew Harwell recently reported this sad fact about the giant social media platforms: “The New Zealand massacre was live-streamed on Facebook, announced on 8chan, reposted on YouTube, commentated about on Reddit, and mirrored around the world before the tech companies could even react.”
  • When the legislature acted nearly 30 years ago to place a tax on newspapers, no one could foresee the changes that would occur on the media landscape. Enactment of AB 1776 will: 1) level the playing field for all competing media with regard to the sales and use tax, no matter the method of distribution; 2) increase the ability of newspapers to employ journalists in California communities and serve the community’s need for accurate local, regional and statewide information; and, 3) slow the further erosion of local news-gathering and reporting caused by the disruptive influence of aggregators of information.

All CNPA members are encouraged to communicate with the members of the Assembly Revenue and Taxation Committee. It is of overriding importance, however, for Rev and Tax Committee members to hear from the newspapers that circulate in their districts. A phone call is best if you have a personal relationship with a committee member. Questions: contact Tom Newton @ 916.288.6015 or tom@cnpa.com.

List of Revenue & Taxation Committee Members

William Brough (R-Dana Point)
State Capitol Room 3141
Sacramento, CA 95814
916-319-2073

Autumn Burke (D-Inglewood)
State Capitol Room 5150
Sacramento, CA 95814
916-319-2062

Kansen Chu (D-San Jose)
State Capitol Room 3126
Sacramento, CA 95814
916-319-2025

Adam Gray (D-Merced)
State Capitol Room 3152
Sacramento, CA 95814
916-319-2021

Chad Mayes (R-Yucca Valley)
State Capitol Room 4098
Sacramento, CA 95814
916-319-2042

Melissa Melendez (R-Lake Elsinore)
State Capitol Room 5128
Sacramento, CA 95814
916-319-2067

Kevin Mullin (D-South San Francisco)
State Capitol Room 3160
Sacramento, CA 95814
916-319-2200

Cottie Petrie-Norris (D-Laguna Beach)
State Capitol Room 4144
Sacramento, CA 95814
916-319-2074

Bill Quirk (D-Hayward)
State Capitol Room 2163
Sacramento, CA 95814
916-319-2020

Luz Rivas (D-Arleta)
State Capitol Room 2160
Sacramento, CA 95814
916-319-2039

Philip Ting (D-San Francisco)
State Capitol Room 6026
Sacramento, CA 95814
916-319-2019