AB 657

Bill Subjects

Abstract

(1) Existing state sales and use tax laws impose a tax on retailers measured by the gross receipts from the sale of tangible personal property sold at retail in this state of, or on the storage, use, or other consumption in this state of, tangible personal property purchased from a retailer for storage, use, or other consumption in this state. The Sales and Use Tax Law provides various exemptions from those taxes, including an exemption for the sale of, or the storage, use, or consumption of, food products for human consumption. Proposition 163, an initiative measure approved by the voters at the November 3, 1992, general election, amended the California Constitution to prohibit the State of California or any of its political subdivisions from levying or collecting a sales or use tax on the sale of, or the storage, use, or other consumption in the state of, food products for human consumption except as provided by statute as of the effective date of that provision and in statute defined, for purposes of the sales and use tax exemption described above, "food products" to mean, among other things, sugar and sugar products, candy, gum, confectionery, and cocoa and cocoa products. This bill would delete "candy" from the definition of "food products," described above, that are exempt from tax. The California Constitution authorizes the Legislature to amend or repeal an initiative statute by another statute that becomes effective when approved by the electors. This bill would provide that the deletion provision described above would become effective only upon approval of the voters. It would also provide for submission of this measure to the voters for approval at the next statewide general election. (2) This bill would also enact the Child Welfare Funding Act that would require a sales tax return filed with the California Department of Tax and Fee Administration (CDTFA) to report gross receipts for sales tax purposes to segregate the taxable sales attributable to the sale of candy, as defined, on a line or a separate form, as prescribed by the department. The bill would require an amount equal to the total amount of gross receipts, or adjusted gross receipts, attributable to the sale of candy for the prior fiscal year as reported to the Department of Finance (DOF) by the CDTFA, as specified, to be deposited into the Candy Tax Fund, created by the bill, as soon as reasonably possible and would require all amounts in the fund to be distributed to the Child Welfare Grant Program Fund, a continuously appropriated fund that the bill would create for the purpose of funding the Child Welfare Grant Program grants described below. By creating a continuously appropriated fund and allocating moneys to that fund, this bill would make an appropriation. This bill would also establish the Child Welfare Grant Program and would require the State Department of Social Services to annually, on or before December 31, distribute to any qualified recipient with dependent minors a Child Welfare Grant Program grant, as prescribed. The bill would define "qualified recipient" to mean an individual who is a resident of the state and either filed a joint income tax return for the preceding taxable year that reported gross income in an amount not exceeding $150,000 or filed an individual income tax return for the preceding taxable year that reported gross income in an amount not exceeding $112,000. This bill would provide that the provisions described above relating to the Child Welfare Funding Act and the Child Welfare Grant Program would become operative only if the amendment to Proposition 163 described above is approved by the voters and takes effect. The bill would make the operation of its provisions contingent upon approval by the voters of an unspecified Assembly Constitutional Amendment of the 2023–24 Regular Session.