Pool service customers in California could soon pay a new service tax if certain lawmakers get their way.
Two bills introduced in the 2012 state legislature aim to address the state’s ongoing budget crisis by expanding sales taxes to cover a variety of services.
“Our government sometimes makes rules that cost pool servicepeople money or time, or make it harder for them to compete effectively,” said John Norwood, president of the California Swimming Pool & Spa Industry Education Council, or SPEC, a Sacramento-based industry lobbying group. “And that’s exactly what these bills would do.”
One bill, AB 1963, would reduce the statewide sales tax from 7.25 percent to 4 percent, but would expand that tax’s range to almost all services sold in the state. Medical aid, tax preparation and a few other services would be exempted. A second bill, AB 2540, would impose a new tiered sales tax on a wide range of services, including pool maintenance.
The bills were introduced Feb. 24, and must be heard by the state’s taxation committee in early April before moving to the floor for a vote. If either bill passes with a two-thirds majority, it would take effect on Jan. 1, 2013.
The concepts behind the bills were initially introduced to state legislators by the Think Long Committee for California, a group of businesspeople and political leaders who hope tax increases such as these will provide $5 billion in new funds for the state’s education system and government.
Though the committee decided not to pursue tax reform in the 2012 legislative session, several lawmakers — including Assemblywoman Alyson Huber (D-Sacramento) and Assemblyman Mike Gatto (D-Los Angeles) — have introduced their own bills inspired by the Committee’s proposals.
Though virtually everyone across the political spectrum agrees California desperately needs additional income, the service bills have garnered their fair share of controversy.
“These taxes would make the competition worse than it already is,” said Greg Jones, owner of Blue Water Pools in Los Angeles. “There’ll be more under-the-table cash transactions if these bills are passed into law — it’ll actually end up costing the state more money in the long run.”
Jones is far from alone in his views. In fact, his argument is consistent with SPEC’s stated position. “These taxes would force more business into the underground economy — the cash economy,” Norwood said. “The result will be that even more businesses will ‘cheat to compete.’”
Norwood also noted that even above-board pool service companies would feel pressure to absorb the taxes, rather than pass them on to customers, to compete effectively — and that companies unwilling to do so would likely lose customers who were already uncertain about the affordability of their pool service.
Between now and the committee’s review, SPEC hopes to spread the word about these bills as widely as possible. The group also is urging pool service professionals to contact their districts’ representatives.
“We’re also going to send letters to the two authors of the bills,” Norwood said. “That’s why we’re here — to monitor the legislative and regulatory affairs of government.”