State Sen. Steve Glaser's bill (Senate Bill 1494), which aimed to change the rules for how online sales taxes flow, has been stalled in a move that will come as a relief to Valley communities that are home to fast-growing e-commerce fulfillment centers.
News driving force: Glaser argued that treating the tax money as something that can be refunded to businesses would give businesses greater bargaining power with local governments and result in every jurisdiction losing more than $1 billion in tax money that could have gone towards public services.
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- Opposition to the bill is bipartisan, with some senators representing cities that benefit from current provisions, such as Cupertino, which gives 35% of the taxes it collects from Apple back to the company, about $4.5 million a year.
- The bill sparked a debate over whether sales tax revenue should go to the local government where the buyer or seller is located. Glaser argued that sales tax revenue should go to the local government where the seller is located, creating a more equitable tax allocation system.
- Despite the bipartisan support, the bill failed to pass the 40-member Senate after 12 senators did not vote, which was considered a “no” vote. Some of the senators who opposed the bill are from communities that benefit from the current tax arrangement.
What they're saying: Sens. Susan Talamantes Eggman and Kelly Seyart, among others, expressed concerns about the bill's potential impact on small communities' ability to compete for large business developers and the distribution of tax-sharing agreements.
- “This bill is about what local governments can do with the resources that they have,” Eggman said. “So, I'm going to introduce some of the winners and I'll let you decide if they're the big boys. The City of Dinuba, the City of Fresno, the City of Merced, … the City of Tracy, the City of Stockton. You know who they are? The little guys that live in that corridor, that breathe diesel fuel, that smell gas, that are taking away a lot of our jobs.”
- The League of California Cities opposed the bill, arguing that its members agree with caps on kickbacks to businesses, increased transparency and fair changes in tax distribution.
