SACRAMENTO — Legislation to repeal the new state sales tax on snack foods, newspapers and magazines was dealt a sharp setback Monday in the Assembly Revenue and Taxation Committee.
Two bills to repeal the new taxes--one that would replace the lost revenues with an increase in cigarette taxes and one that would substitute a new oil tax--were defeated by lopsided margins.
Opponents included Gov. Pete Wilson, lobbyists for tobacco companies, business groups, oil companies and lawmakers from both parties.
The bill to substitute the snack food and newspaper tax bills with a new cigarette tax was rejected 5 to 2. The second bill did even worse, getting only two votes in favor and six against.
The author of the bill to raise the tobacco tax, Assemblyman Lloyd G. Connelly (D-Sacramento), moved to have the legislation reconsidered. But he said the vote left him with little hope of seeing the sales tax measures repealed.
Connelly said the committee members voted despite widespread expressions of anger over the new taxes. "If they are not willing to move now I think in point of fact, unfortunately, the anger of the moment will pass, the public will accept it, and we will have adopted and implemented what I think is a bad tax policy when we could have gotten the same revenue with a good tax policy--that is taxing tobacco instead of food."
A poll commissioned by several major newspaper publishers and businesses in the snack food industry showed that Californians, by a 3-1 margin, preferred higher tobacco taxes to the new tax on their products.
Assemblyman Jack O'Connell (D-Carpinteria), the author of the second bill, said he was not giving up. His bill would have repealed the new sales tax on bottled water, as well as on snack foods, newspapers and magazines. He wanted to substitute in their place a 9% tax on oil as it is pumped from the wellhead. "We are the only major oil-producing state in the nation without an oil severance tax," O'Connell said.
During the hearing, lobbyists and other representatives of newspapers and magazines said the tax is coming when the publishing industry is reeling from a recession and a number of publications, such as California magazine, are going out of business.
Officials of small magazines said the new tax was expensive and difficult for them to administer, forcing them in many cases to pay the tax themselves rather than pass it on to their subscribers.
Snack food manufacturers argued that the new sales tax on their products is difficult to administer and confusing to consumers, leaving such items as doughnuts untaxed while taxing nearly identical products, such as Ding Dongs.
Opponents on the committee argued that the new taxes were part of a complex deal to reduce a projected $14.3-billion deficit and that they were reluctant to pass anything that, in the words of one lawmaker, "would tear it apart."