Excise Tax

Let's call it what it is: a sin tax. A California lawmaker is targeting the obesity epidemic with a tax that would slap a penny-an-ounce levy on drinks sweetened with sugar or corn syrup. The food industry, not surprisingly, has squared off against the idea, arguing that the tax bill is a punitive assault on personal choice. "The government doesn't have the right to social engineer," said J. Justin Wilson, senior research analyst at the industry-backed Center for Consumer Freedom.

Now that they have filed their income tax returns and written their checks, many Californians are starting to realize that government greed is no laughing matter. In November, California voters approved Proposition 30, raising the state's top income tax rate to 13.3%, an increase of more than 29%. The state sales tax now ranges from 7.5% to 10%, the highest statewide rate in the nation. The tax increases are supposed to raise an additional $6 billion in revenue. But that's not enough for California politicians.

The Senate Finance Committee began work today on a bill to overhaul the nation's tax code, but the most crucial part of the chairman's plan--raising taxes on items like gasoline and alcohol to pay for other breaks--ran into quick trouble. As the 20-member Republican-led panel opened what is expected to be about two months of bill-writing, Chairman Bob Packwood (R-Ore.

It's probably the last thing that California motorists want to hear: the state's excise tax on gasoline will rise by 3.5 cents a gallon on July 1. The increase will take the state's excise tax to up to 39.5 cents a gallon for every gallon of gasoline sold in California. It's also a change that will put upward pressure on retail gasoline prices at the pump at a time when California already pays more for gasoline than almost every state in the nation. Today, for example, the average cost of a gallon of gasoline in California is $4.222, according to the AAA Fuel Gauge Report.

Richard G. Darman, the newly retired deputy secretary of the Treasury, suggested Sunday that an increase in excise taxes could form part of "the basis on which there could be a compromise" of budget differences between the White House and Congress.

Telephone callers will see one tax drop off their bills this summer and can look forward next year to a refund of federal taxes paid on long-distance and bundled services. "That's the taxpayers' money, and they deserve to have it, not the government," Treasury Secretary John W. Snow said Thursday, announcing the decision to stop fighting companies challenging the tax in court. Beginning July 31, consumers will stop paying a 3% federal excise tax on long-distance calls and bundled services.

An attorney for the Pacific Legal Foundation, a statewide taxpayers' group, said the group will look into the legality of Fresno's proposed excise taxes. Attorney Jonathan Coupal said the proposal to impose a $10 monthly excise tax on each household in the San Joaquin Valley city may be illegal. He said it could be an attempt by the City Council to get around obtaining taxpayers' approval for the tax increase.

Attempting to speed a national decline in smoking and raise funds to combat smoking-linked disease, the California Medical Assn. on Tuesday called for legislation to establish a $3 excise tax on each pack of cigarettes. Dr. Richard F. Corlin, outgoing president of the association, said revenue from the $3 tax would reflect the estimated cost of caring for medical problems caused by cigarette smoke. The Clinton Administration already is considering a $2-per-pack tax.

Three defendants have pleaded guilty in federal court to tax fraud, mail fraud and other charges stemming from a diesel fuel excise tax evasion scam that involved 23 arrests and stretched from the San Fernando Valley to Long Beach, federal prosecutors said. Manouk Isahak Nalchian of Glendale, Youssef Kamel Keroles of San Pedro and Andranik Dzhrdzhyan of Los Angeles entered guilty pleas Wednesday to various charges before Judge James M. Ideman in U.S. District Court in Los Angeles.

Travelers received a bonus Monday when several airlines stopped collecting a federal excise tax, slashing the cost of domestic air tickets by 10% at a time when some prices were already lower because of a winter fare war. But travel industry officials urged people to move quickly to take advantage of the savings, because Congress is expected to reinstate the tax, which expired New Year's Eve. The tax, along with a $6 fee on international departures and a 6.

SACRAMENTO - An elected state tax collector wants to save strapped California motorists money by freezing the sales tax on gasoline whenever the pump price jumps above $4 a gallon. The idea, said George Runner, a Republican member of the State Board of Equalization, is to put a few bucks back in consumers' pockets rather than provide a small windfall to local governments. Gasoline prices in California averaged $4.33 on Wednesday, according to AAA's Daily Fuel Gauge Report.

Just days before investors would have their say on Walt Disney Co.'s executive pay, the entertainment giant changed the contracts of its top executives to remove a generous perk that had come under fire from an influential shareholder advisory firm. The company said it would no longer pay the taxes on any severance package for Chief Executive Robert A. Iger and three other senior executives in the event they lost their jobs in a sale or merger of the Burbank entertainment company.

Let's call it what it is: a sin tax. A California lawmaker is targeting the obesity epidemic with a tax that would slap a penny-an-ounce levy on drinks sweetened with sugar or corn syrup. The food industry, not surprisingly, has squared off against the idea, arguing that the tax bill is a punitive assault on personal choice. "The government doesn't have the right to social engineer," said J. Justin Wilson, senior research analyst at the industry-backed Center for Consumer Freedom.

Tax hikes related to healthcare The new healthcare law imposes several tax increases, but most do not take effect immediately, and most apply only to upper-income Americans. Revenue estimates are over 10 years, 2010 through 2019. Medicare taxes, effective 2013 ($210.2 billion) Payroll tax increases from 1.45% to 2.35% on wage income over $200,000 for individuals; over $250,000 for couples. For taxpayers in that bracket, a new surtax of 3.8% on investment income.

Following their decisive healthcare defeat in the House, Republicans on Monday prepared a three-pronged effort to wage a continuing fight against the bill -- beginning with a drive this week to stall follow-up legislation in the Senate. And even before the healthcare bill has become law, Republicans are backing an effort by a dozen state attorneys general to challenge the bill's constitutionally in court, and they are making it a 2010 campaign priority to call for the law's repeal.

There they go again with their raids and gimmicks, right? Last month, Gov. Arnold Schwarzenegger proposed eliminating the sales tax on gasoline but raising a separate excise tax almost, but not quite, as high, so taxpayers would feel like they're getting a break at the pump. But the scheme eviscerates Proposition 42, a 2002 voter initiative designed to put an end to transportation fund raids, and wipes out funding for public transit. Now Senate Democrats are countering with a plan that raises the excise tax by an additional nickel and uses that amount to fund transit -- while getting around the two-thirds vote requirement for raising taxes and still gutting the initiative.

Senate Leader David A. Roberti, the Legislature's No. 1 advocate of tougher gun controls, on Friday proposed levying an additional 5% sales tax on the purchase of firearms and ammunition and restricting gun magazines to a maximum 10 rounds.

American Airlines said Sunday it will pass onto customers savings from the 10% federal excise tax on airline tickets, which expired at midnight Sunday, as the budget battle continues in Washington. If other airlines follow suit, the effect will be a nationwide 10% cut in domestic air fares. Although Congress may reinstate the tax, airline and federal officials do not expect it to be retroactive to Jan. 1.

Lobbyists for organized labor usually run into stiff Republican head winds when pushing their legislative agenda. But on healthcare reform, congressional Republicans proved to be the unions' most valuable ally -- albeit inadvertently. With no GOP votes available for the House and Senate reform bills, top Democrats and the White House had little choice but to make peace with the unions on the issue of taxing "Cadillac" insurance plans, giving unionized workers far more time to adjust to the new tax than nonunion employees.

The Center for Science in the Public Interest believes that many states might be able to close gaps in their budgets by placing a tax on soda and other sugary drinks. The health advocacy group released a study this week that estimates budget-strapped states -- including California -- could generate a combined $10 billion a year by levying a tax of 7 cents per 12-ounce can of Coke or other beverage. Currently, 25 states impose special taxes on sugary drinks. The group, which is lobbying for such taxes and has suggested a national excise tax on sugared drinks, said raising the price of the beverages would reduce consumption.