California Prohibits Local Taxes on Groceries

A local agency cannot impose, increase, levy and collect, or enforce any California sales and use tax, fee, or other assessment on groceries.

Taxes Imposed Prior to January 1, 2018

A local agency may continue to levy and collect, enforce, or reauthorize any tax, fee, or other assessment on groceries imposed, extended, or increased on or before January 1, 2018. Any such tax or fee on groceries imposed by a local agency after January 1, 2018, and before June 28, 2018, is inoperative as of June 28, 2018, and ceases to be imposed, levied and collected, and enforced as of that date.

“Tax” Defined

“Tax, fee, or other assessment on groceries” includes but is not limited to a sales tax, gross receipts tax, business and occupation tax, business license tax, excise tax, privilege tax, surcharge, or any other similar levy, charge, or exaction of any kind on:

– groceries; or

– the manufacture, supply, distribution, sale, acquisition, possession, ownership, transfer, transportation, delivery, use, or consumption of groceries.

Definition of “Groceries”

“Groceries” are defined as any raw or processed food or beverage, including its packaging, wrapper, or container, or any ingredient of such food or beverage, intended for human consumption, including but not limited to:

– meat;

– poultry;

– fish;

– fruits;

– vegetables;

– grains;

– bread;

– milk;

– cheese and other dairy products;

– carbonated and noncarbonated nonalcoholic beverages;

– kombucha with less than 0.5% alcohol by volume;

– condiments;

– spices;

– cereals;

– seasonings;

– leavening agents;

– eggs;

– cocoa; and

– raw or processed teas and coffees.

The term does not include:

– alcoholic beverages;

– cannabis products;

– cigarettes;

– tobacco products; and

– electronic cigarettes.

Exemption from Prohibition

The imposition, extension, increase, levy and collection, or enforcement of a tax, fee, or other assessment on groceries is not prohibited by a local agency if both of the following apply:

– the tax, fee, or other assessment is generally applicable to a broad range of businesses, business activity, or products; and

– the tax, fee, or other assessment does not establish or rely on a classification related to or involving groceries or a subset of groceries for purposes of establishing or otherwise resulting in a higher tax rate due to that classification.

Sunset Date

These provisions sunset on January 1, 2031, and are repealed as of that date.

Ch. 61 (A.B. 1838), Laws 2018, effective June 28, 2018

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AUTHOR

CCHTaxGroup

All stories by: CCHTaxGroup