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Prop. 26 confusion: What's a tax?

Prop 26 cartoon

When should a "fee" be called a "tax"?

Is it a tax or a fee when the government slaps a 20-cent-per-pack levy on cigarettes to help clean up litter -- as San Francisco has?

Is it a fee or a tax when the state Legislature gets paint companies to pay for a program to collect leftover paint and keep it -- and its toxic chemicals -- out of landfills?

Is it a tax or a fee when petroleum companies must contribute to a fund for oil spill cleanup?

This isn't semantics.

On Nov. 2, California voters, by 53% to 47%, approved Proposition 26, a ballot initiative that reclassifies most regulatory fees on industry as "taxes" requiring a two-thirds vote in government bodies or in public referendums, rather than a simple majority.

Now, from the Capitol in Sacramento to the boardrooms of county supervisors and city councils, lawmakers and lobbyists are scrambling to assess the fiscal and political effects of the measure, one of the most sweeping ballot-box initiatives in decades.

Before the election, few paid heed to Prop. 26, besides the oil, tobacco and alcohol companies that funneled millions of dollars into promoting it in the final weeks of the campaign.

Oil companies, led by Chevron, contributed $5 million to the Proposition 26 campaign, the most of any industry. Besides the fee vs. tax provision, the initiative contains a section outlawing revenue-neutral funding bills, a legislative strategy recently aimed at passing an oil severance tax. California is the only major oil-producing state without an extraction tax. If a severance tax were enacted, it would likely cost them as much as $1.2 billion a year.

Environmentalists and health advocates said the initiative makes it nearly impossible in the current political climate to boost industry fees for cleaning up air, water and toxic waste pollution; for curbing smoking and alcohol abuse; or for enacting new programs. Republicans control more than a third of the votes in the legislature, and would be able to block any levy now reclassified as a tax.

"California just got a lot harder to govern," said Bill Magavern, California director of the Sierra Club. "This poorly drafted initiative is virtually a full-employment act for lawyers." Both industries and public interest groups can be expected to turn to the courts over what constitutes a fee, as opposed to a tax, under the Prop. 26.

In Bakersfield this week, city lawyers advised council members to hold off on a tobacco retailer fee to fund sting programs that catch stores selling cigarettes to minors, a program already operating in surrounding Kern County. The city attorneys plan to ask the state attorney general if they will now have to get a two-thirds vote under Prop. 26.

"We think it was a fair way to go," said Allan Zaremberg, chief executive of the California Chamber of Commerce, the biggest contributor to the Proposition 26 campaign. "It clarifies what is a tax and what is a fee. Right now, the public doesn't want any taxes."

Read more about the looming battle over Proposition 26.

-- Margot Roosevelt

RELATED: Prop 26: a new strategy for Big Oil?

                 Prop 23: Backers were out-spent, out-organized

                 Valero's campaign against California's climate law

Cartoon: Ted Rall / For The Times

Comments () | Archives (8)

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If the legislature had been dealing with us honorably over the last 20 or 30 years, there would have been no need for this law. I fear politicians will never get the message.

This proposition came about, because the Democrats in the California Legislature tried to pull a fast one, and declare virtually every "tax" a "fee".

As far as the Sierra Club goes, that organization has turned into a sham. It is now Al Gore rather than John Muir. The people who work their are just shuffling money from donations into their own pockets.

do student tuitions count as "fees" to be regulated under this new law? Does it impact the recent 8% tuition hike at the UC campuses?

Ill informed voters passed Prop 26. Corporate polluters and Wall Street hacks were hoping they could fly under the radar with Prop 26 banking on the simplistic "anti-tax" message. If voters had actually voted in their own interest it would have failed miserably but instead the wealthy and their lawyers are laughing all the way to their off shore banks. Eventually CA will get smart and reverse this travesty but until then hold your nose.

How about this from

tax    /tæks/ –noun
1. a sum of money demanded by a government for its support or for specific facilities or services, levied upon incomes, property, sales, etc.
2. a burdensome charge, obligation, duty, or demand.

The government collect many taxes for good causes. If the tax is justifiable and equitable why is 2/3 such an unrealistic requirement.

The problem seems to be Californians are sick and tired of new taxes (or call them fees if it makes you feel better) on everything we do, rather than economizing and prioritizing the budget with some of the highest tax rates in the country.

The job of our legislator is more than thinking of new ways to suck more money out of what little we have left. Until they learn to wisely spend the big piece of my money they already get, I say no more.

Continue their spending? Are you insane? Why don't you go live in a toxic wasteland full of nuclear waste, polluted water, Crime, unbreathable air that ACTUALLY KILLS human's every day! there is NO CONJURING except on the corporate side where these Corporations REFUSE to be held accountable for their actions of contributing to further issues in our environment.

I am a hard working, tax-paying, fully employed individual. and I have no problem paying more taxes if it means preserving our land, keeping our towns and cities safe, cleaning our (once) beautiful sky so our kids can have healthy lungs and do healthy activities without having issues in the future. Why is it that Satanic, evil boneheads like yourself defend these companies. Why do the profit margins have to be insanely high for them to be "competitive" When is a good profit going to be enough. Instead of milking every single cent they can to stop doing what they should be doing anyway. Go read a book you uneducated, evil dolt!

it sounds like the local governments are squealing like "stuck pigs"...someone took away the trough...where are they going to get the money to pay for their pet projects...their bloated salaries...the money they funnel to their "contributor" buddies...i.e., developers, lawyers, & swindlers...who work the public with their song and dance about whats best for us!!!

You can be certain that every governmental agency in this state is conjuring up ways to get around the restrictions so they can continue their spending.


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