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Thus Amazon, who has refused to comply with the new law, could still have a competitive tax advantage over California-based companies.
“Although the new law applies to certain out-of-state Internet companies selling to California consumers, the law does not automatically require every Internet company 'engaged in business in California' to collect district use taxes,” said Horton. “Amazon could still avoid collecting and paying the district use taxes on California consumers’ purchases.”
For example, Internet company X makes an Internet sale to Mr. Smith and ships the merchandise from outside of California to his residence in the city of Inglewood via common carrier.
As long as Internet company X is not "engaged in business" in the districts where Mr. Smith’s residence is located (the city of Inglewood and the county of Los Angeles), then Internet company X is not required to collect district tax from Mr. Smith and only has to collect the cumulative state and local use tax rate of 7.25 percent, for the merchandise it ships to Mr. Smith in Inglewood.
However, if Mr. Smith made that same purchase from a brick-and-mortar store located in the city of Inglewood, then the applicable cumulative state, local, and district tax rate would be 9.25 percent, including cumulative district taxes of 2 percent.
In the city of Inglewood, that is a 2 percent (cumulative district taxes) advantage. Furthermore, that 2 percent may be Mr. Smith's liability.
In this example, Internet company X is not obligated to collect the district taxes since it is not engaged in business in the city of Inglewood or the county of Los Angeles. This gives the out-of-state retailer a 2 percent tax advantage and allows it to appear to sell their products for 2 percent less than the Inglewood store.
Elected in 2010, Chairman Jerome E. Horton is the Fourth District member of the California State Board of Equalization, representing more than 8.5 million residents in Los Angeles County. He is also the Board of Equalization Legislative Committee chairman. He is the first to serve on the Board of Equalization with over 21 years of experience at the BOE. Horton previously served as an Assembly Member of the California State Assembly from 2000-2006.
The five-member California State Board of Equalization is a publicly elected tax board. The Board of Equalization collects more than $48 billion annually in taxes and fees supporting state and local government services. It hears business tax appeals, acts as the appellate body for franchise and personal income tax appeals, and serves a significant role in the assessment and administration of property taxes.
For more information on other taxes and fees in California, visit www.taxes.ca.gov.
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- Written by: California Board of Equalization
Plentiful rain and snow this past winter not only ended California’s drought, it gave a healthy boost to Pacific Gas & Electric's hydroelectric power.
The added snow and rain is already benefiting the utility’s customers, the environment, and the power grid, according to the company.
That’s because hydroelectric power is less expensive than most other forms of power available in the market.
Hydropower also generates energy without producing greenhouse gases and helps increase the percentage of PG&E’s renewable generation for the year.
During the hotter months of the summer, typically in July and August, hydropower helps PG&E meet peak-demand periods.
When the river systems are under control, water flows can be routed through the powerhouses to produce electricity to meet increased demands on the energy grid.
This year the abundant snowpack could lengthen the typical hydropower yield into the late summer.
PG&E anticipates this year’s hydroelectric power yield will be 21 percent above average. The additional hydroelectric power means PG&E won’t have to produce or buy as much power from other generation sources which rely on more expensive fuels, such as natural gas, to generate power.
The added hydroelectric power translates into a reduction of 886,621 metric tons of CO2 emissions – equivalent to the electricity use of 107,600 homes for an entire year, according to the U.S. Environmental Protection Agency’s Greenhouse Gas Equivalencies Calculator.
California’s mountain snowpack was at 163 percent of normal as of April – the highest amount since 1995. A cool spring and additional precipitation has slowed the snowmelt, leaving the state’s snowpack at more than three times of normal as of June 1. That late snowpack poses its own set of challenges as the hot summer days approach and snowmelt accelerates.
“We have both abundant water supply and a late season snowpack – a great problem to have when it comes to hydroelectric production,” said Mike Jones, power generation lead. “We are vigilantly managing these additional late season water flows to produce energy to meet our customers’ needs while also striving to ensure public safety.”
Jones points out how PG&E does not have sufficient water storage capability to capture all this snow as it melts.
“Consequently, we seek to manage the hydro runoff in a predictable manner – releasing water to our hydro facilities and into river systems before reservoirs are full,” said Jones. “River flow changes are controlled for recreational users. We want some reservoir space available in case we have a heat wave or thunderstorm that results in a sudden influx of snowmelt.”
Because PG&E’s rates are based on the forecasted cost of delivering the energy, less money spent on power in the open market translates into cost benefits for customers.
These hydro levels are also likely to help bring PG&E closer to its renewable portfolio standard (RPS) goals, since small hydropower generation of less than 30 megawatts qualifies under California’s RPS mandate.
Although most of the news about full reservoirs is good, Californians need to be aware as they enjoy recreational activities at the many public facilities such as boat launches, fishing docks, picnic areas and campgrounds maintained by PG&E. The wet year increases the chance for potential dangers at these recreational facilities.
The water in rivers and reservoirs is deeper, colder and moves more swiftly. To help keep the public safe, PG&E is increasing communications about water safety and how to avoid potential water hazards.
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- Written by: Editor
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