Sales and use taxes: fuel taxes.

The Sales and Use Tax Law imposes a tax on retailers measured by the gross receipts from the sale of tangible personal property sold at retail in this state, 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. Assembly Bill 6 of the 2009–10 8th Extraordinary Session would, if enacted, impose an additional 1.75% tax on the sale of, and the storage, use, or other consumption in this state of, diesel fuel on or after July 1, 2011. This bill would exempt the sale of, and the storage, use, or other consumption of, specified diesel fuel from that tax that would be imposed by AB 6 of the 2009–10 8th Extraordinary Session. Assembly Bill 6 of the 2009–10 Eighth Extraordinary Session would both increase and decrease the rates of specified taxes and require adjustments to the rates on an annual basis to achieve revenue neutrality. Assembly Bill 6 would increase the rate of tax under the Motor Vehicle Fuel Tax Law on the removal, entry, sale, delivering or specified use of motor vehicle fuel, including aviation gasoline. This bill would clarify that the rate changes to achieve revenue neutrality would be effective for the next fiscal year. This bill would exclude aviation gasoline from the increase in the rate of motor vehicle fuel taxes. The Sales and Use Tax Law requires a collection of prepayment of retail sales tax at the time that motor vehicle fuel tax or diesel fuel tax is imposed, and on each subsequent sale other than the retail sale. This law requires the State Board of Equalization to establish the prepayment rate based on 80% of the combined state and local sales tax rate, as prescribed. This law authorizes the board to readjust the rate if the price of fuel decreases or increases and the established rate results in prepayments which consistently exceed or are significantly lower than the retailers' sales tax liability. This bill would also authorize the State Board of Equalization to readjust the rate if an exemption from sales tax for sales of fuel, as specified, is enacted and the established rate results in or could result in prepayments which consistently exceed or are significantly lower than the retailers' sales tax liability. This bill would become operative only if both this bill and AB 6 of the 2009–10 8th Extraordinary Session are chaptered and this bill is chaptered last. This bill would take effect immediately as a tax levy.