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Lumberyards object to state wood tax

Lumber sellers say the 1% assessment will hurt business by raising prices. But home builders don't object to the law, expected to raise $35 million a year for forest land regulation and firefighting.

December 05, 2012|Marc Lifsher, Los Angeles Times

SACRAMENTO — Some California lumber sellers are angry about a new state tax on 2-by-4s, plywood and other forest products, and they want to make sure that their customers blame the governor and legislators for the upcoming hike in building costs.

The 1% special assessment, proposed by Gov. Jerry Brown and approved in September by lawmakers, is expected to raise $35 million a year to pay for the regulation of commercial forest lands and for firefighting and prevention.

Retailers, including home improvement mega stores such as Home Depot and Lowe's and traditional, single-store and small lumberyard chains, call the new tax unfair.

"The new 1% tax singles out the hard-hit housing industry still struggling to recover from the economic recession," said Home Depot spokesman Stephen Holmes.

"This tax is going to hurt business," said Basil Alexander, manager of Anawalt Lumber in West Hollywood. The new 1% tax hike, combined with a quarter-cent rise in the state sales tax, which will be 9% in the city of West Hollywood, for example, could cause homeowners to scale back remodeling projects, he said.

"It may change their idea of what they are going to do or how they are going to do it or how big it's going to be," Alexander said.

Newly taxable wood products represent about 60% of the cost of home remodeling additions and new residential construction, he estimated. According to his calculations, the tax could add as much as $600 to the cost of a $100,000 room addition.

Anawalt plans to post disclaimers on its cash registers, Alexander said, telling customers the fee "is not an Anawalt Lumber add-on. It's the state law."

But California home builders don't share the retailers' concerns about the small hike in lumber prices.

Mike Winn, president of the California Building Industry Assn., predicted that the tax will add only about $115 to the cost of a typical 2,000-square-foot new home. His 3,200-member organization did not oppose the governor's legislation.

The new measure, to take effect Jan. 1, shifts the cost of forest land regulation from timber companies to consumers. Supporters, including the California Forestry Assn., said it broadens financial support for the program and allows California forest products companies to better compete with out-of-state timber firms.

The bill also includes a controversial provision that put legal limits on the ability of government agencies to sue landowners, timber operators and others whose negligence might have caused forest fires.

"This legislation enacts serious bipartisan reform to even the playing field to protect California's timber industry jobs," Brown said in a Sept. 11 signing statement.

The tax applies to milled lumber, plywood, wood siding and roofing, fencing and other wood products sold in California, whether they are milled here or elsewhere.

California's sales tax collectors, the state Board of Equalization, has compiled a list of taxable products and details of how to collect the levy and remit to the state. The information is being sent in letters to about 200,000 retailers, contractors and consumers explaining how the tax works and to make sure that all affected parties know about the new obligation.

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