Jarrell Cook

Lawmakers Consider a Sales Tax on Services

By Jarrell Cook, Associate Policy Director

Capitol Update, March 2, 2018 Share this on FacebookTweet thisEmail this to a friend


Senator Robert Hertzberg (D-Los Angeles) has introduced SB 993, a bill that imposes a tax on services at a yet-to-be-defined percent of the price of the service. The bill exempts businesses with gross receipts of less than $100,000 in the previous four quarters, as well as health care, education, and child care services, and interest and insurance payments subject to the gross premiums tax.

This proposed tax will significantly impact manufacturers. Not only does it raise the costs in a manufacturer’s supply chain for the delivery of materials, it also raises the cost of other necessary business services for manufacturers, including accounting, legal, maintenance, and sanitation, among many others. Manufacturers that provide a mix of goods and services would also need to begin accounting for both the goods and services tax when pricing goods to consumers under this proposal.

CMTA is following the bill closely and looking to ensure that lawmakers understand the full impact that a sales tax on services would have on both the manufacturing industry and consumers.

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