(November 14, 2008) Industry-specific tax increases will hamper the economic recovery necessary to improve the state’s budget outlook, the California Chamber of Commerce told the Governor and state legislators yesterday.
“Our state’s fiscal health will never improve without a strong economy,” CalChamber Vice President of Government Relations Marc Burgat wrote in a letter sent yesterday to Governor Arnold Schwarzenegger, with copies to legislators. “As such, each budget proposal must be balanced between the need to maintain necessary government programs and stimulate economic growth.”
The letter continued as follows:
“We strongly support your early leadership in working to solve the budget crisis and your call for an economic stimulus package to be included in the budget solution.
“Sound fiscal policy will result in material improvements to California’s economy and encourage a swift and strong rebound from the current slowdown. On the other hand, the wrong policies will only make matters worse. Ultimately, the solution to California’s budget crisis will only come from robust economic growth and job creation.
“With this in mind, we must make you aware of the most troubling revenue-raising proposals included in your plan, namely, tax increases that single out a specific industry or profession to shoulder billions of dollars of permanent tax burden. These industry-specific taxes kill good jobs and harm industries unique to California.
“For example, a new tax on oil production in California will ultimately make California oil more expensive than that produced in foreign countries and harm our state’s competitiveness. It won’t change the amount of oil used in California, but it will result in loss of high quality jobs in the industry, increased imports to the state and increased prices at the pump.
“Likewise, singling out the alcoholic beverage industry for a $293 million tax increase will directly affect our important wine industry and beer production facilities, costing high quality jobs in both sectors.
“In addition to the above mentioned proposals, we also oppose sales taxes on services and on entertainment. These taxes would impede sustained economic recovery and burden already-struggling California businesses. Adding the services tax to the new proposed general sales tax hike would be a sudden, nearly 10 percent price increase in repairs, entertainment events and veterinary services. We have no doubt that such an increase would result in substantially less business at repair shops, attendance at entertainment events, and care for ailing pets.
“We recognize that arriving at solutions to the state’s budgetary problems are difficult at best, but these targeted tax increases will hamper our economic recovery just when we will need jobs and tax revenues the most. Although we support your leadership and call for economic stimulus, we must oppose these industry-specific taxes.”
Staff Contact: Marc Burgat
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