Senate Bill 8 was referred to by a Cartridge World franchisee as “another tax and another financial burden”.
Folsom Telegraph reported on the proposed reform bill, which will “impose sales tax on services”, and which is currently “awaiting a hearing in the California senate”. SMBs in the US state would see operations “be heavily affected” by the Upward Mobility Act’s approval by the Senate Committee on Governance and Finance.
The bill, submitted by Democratic State Senator Robert Hertzberg – who also chairs the committee where the bill’s hearings would be heard – would impose a $10 billion (€9.3 billion) sales tax on services. This would “apply to everything” from accountants to restaurants, as well as small businesses focused on the cartridge remanufacturing industry such as Cartridge World franchises.
Gary McConnell, co-owner of the Cartridge World stores in El Dorado Hills and Rancho Cordova in the state, spoke to Folsom Telegraph he was “somewhat” familiar with the bill, and called it “another tax and another financial burden on small business owners. I’m not in favour of it”. The bill would “lessen the state’s current sales tax but not eliminate it”, while businesses with less than $100,000 (€93,066) in sales would “be exempt” alongside health and education services.
Hertzberg defended the bill by stating that 90 percent of corporations in California are small businesses, “and maybe corporations of under $5 million (€4.6 million) wouldn’t pay at all”. He also stated that if it were passed and “enough money was generated”, then personal income taxes “would be reduced, and so would corporate taxes”. A recent study associated with the bill found that if passed, the bill would allow California to receive between $60 billion (€55 billion) and $130 billion (€120 billion) in revenue.
The current tax “captures about 30 percent of what it could” according to Hertzberg, as California is “subject to boom and bust budget cuts, partly because of California’s inability to capture taxes on services”. However, to pass the bill would require a two-thirds vote “in a senate that no longer has a Democratic super majority”, and would require Governor Jerry Brown’s signature.
John Kabateck, California Executive Director of the National Federation of Independent Businesses, commented that excluding SMBs making up to $100,000 per year “is no big deal […] unfortunately, these days that’s about the equivalent of a paper route. If we’re going to have an honest discussion about California’s tax system we shouldn’t begin that process by placing fear and uncertainty in already struggling small mom and pop businesses.”