Saturday, November 28 , 2015, 11:35 pm | Fair 50º

George Runner: Confusing New Lumber Tax Targets California Consumers

By George Runner |

It’s a new year, and with it comes higher taxes and more government spending. In 2013, overtaxed Californians will send more of their hard-earned dollars to Sacramento than ever before, growing total state spending to a record $225 billion.

George Runner
George Runner

Higher taxes shouldn’t be a surprise. After all, the majority of Californians voted for Proposition 30 this past November. But one new tax hike that took effect Jan. 1 is catching many off-guard and driving up costs for everything from new homes to home improvement projects.

Late this summer, two-thirds of the Legislature approved and Gov. Jerry Brown signed legislation imposing a new “Lumber Products Assessment” on some retail sales. The new law adds a 1 percent assessment on certain lumber and engineered wood products sold in California.

That might sound straightforward enough, but it’s not — and that’s one of many reasons I oppose this new tax.

Although some products containing wood will be taxed, others will not. You’ll find out when you reach the cash register, assuming your local hardware store has managed to reprogram its cash registers in order to collect it.

Going forward, an unelected bureaucrat at the Board of Forestry and Fire Protection will have the authority to unilaterally add or remove products annually from the list of taxable items. This power to declare items taxable could create a constantly changing answer to the question, “How much tax must I pay on this lumber product?”

Items subject to the tax must contain at least 10 percent primary wood content. Examples include, but are not limited to, lumber, plywood particle board, poles, posts, structural panels, decking, railings, fencing (poles, solid board), roofing (shakes and wooden shingles), siding and sub-flooring.

Items not within the scope of the tax are “secondary wood products” where additional labor has added significant value to the product, including furniture, firewood, paper products, windows and doors.

This new tax came about as a direct result of California’s excessive environmental regulations. California timber producers are at a competitive disadvantage to those in Oregon, Washington, Idaho, and other states because of California’s high environmental fees, which are a major impediment to doing business and creating jobs in our state.

However, instead of working to lower these high costs, the Legislature concocted a scheme to pass them on to consumers. The 1 percent surcharge, in addition to the normal sales tax charged on most retail purchases, will serve to buy down the environmental fees that producers would normally pay. Instead of producers paying the fees, consumers must now pay them directly.

This sets a dangerous precedent for taxpayers. Which industry will be next to ask consumers to pay the costs of their environmental impact fees? Farmers? Movie producers? Silicon Valley?

This new tax also causes significant hardship for retailers who must reprogram their cash registers to collect the new assessment. One trade group has estimated that it will cost on average $4,500 per business location to perform this government-mandated reprogramming.

While the law does provide for cost reimbursement, unfortunately a majority of my colleagues on the Board of Equalization voted to limit reimbursement to $250 per location. As a result, business owners will be on the hook for any additional costs.

Meanwhile, the board requested $1 million of taxpayer funds to recoup its own costs of upgrading computer systems to process the tax.

Struck by inconsistency of these actions, I told my colleagues, “I’m a little embarrassed that we are not afraid to ask for our full reimbursement for costs, but we’re not willing to ask for full reimbursements for businesses in California.”

Is it any wonder why job creators avoid California like the plague? Business owners in our state never know what new government tax or mandate will hit them next.

Rather than cooking up more complicated taxes and fees, the Legislature ought to spend its time finding ways to help California job creators succeed. Instead of passing the costs of its excessive laws and regulations on to consumers and business owners, it ought to address those issues directly by determining how costs could be reduced overall.

George Runner represents Santa Barbara County as the Second District member of the California Board of Equalization. The opinions expressed are his own.

comments powered by Disqus

» on 01.09.13 @ 08:22 PM

Forget it George, the lunatics run the asylum now. These Taxifornia nut cases can only milk so much out of the “nice weather” here. The dwindling middle class and poor spend most of their time working far too hard and long to pay for the weather so they will be leaving in ever higher numbers. The wealth generators are already leaving. That means the filthy idle rich and the fixed income retirees will be the only ones left and the rich don’t pay taxes, so you know who will now.

» on 01.09.13 @ 09:56 PM

You didn’t tell the entire story. Maybe it got cut out by the editor. I’ll help out:

The 1 percent tax shifts costs for oversight of the timber industry from timber companies to consumers. So, timber companies supported the change because “it eliminates a financial advantage for out-of-state operations, which didn’t need to pay the fee.” (LAT)

Also, the bill controversially limited the amount of money government agencies can seek in wildfire lawsuits. That’s another benefit for timber companies which they supported.

Your concerns are valid ones, but don’t forget to tell the entire background. If I missed anything, let us know. That’s all.

» on 01.10.13 @ 02:25 PM

Higher taxes always result in higher prices.  And it’s always consumers that pay them.  Where else can the money come from?

» on 01.10.13 @ 04:54 PM

Underdog, that is a relevant piece of information and changes the dynamic of the story told by George, thanks.

» on 01.10.13 @ 09:59 PM

And did our legislator, Das Williams, vote for this added tax, the shift from the timber companies to the consumer?

» on 01.11.13 @ 11:40 AM

Das, like Lois, is a lap dog, what ever the DNC wants.

» on 01.23.13 @ 04:37 PM

Das Williams wasn’t influenced by the DNC in increasing SB residents’ tax burden by having the city take over Cliff Drive from the state;he was influenced by a small group of mesa lobbyists who decided to live on a main transportation artery used by thousands of vehicles/day and who expect it to be converted to a road as pedestrian friendly as a residential street used by fewer than 20 vehicles/day.

Support Noozhawk Today

You are an important ally in our mission to deliver clear, objective, high-quality professional news reporting for Santa Barbara, Goleta and the rest of Santa Barbara County. Join the Hawks Club today to help keep Noozhawk soaring.

We offer four membership levels: $5 a month, $10 a month, $25 a month or $1 a week. Payments can be made through PayPal below, or click here for information on recurring credit-card payments.

Thank you for your vital support.


Daily Noozhawk

Subscribe to Noozhawk's A.M. Report, our free e-Bulletin sent out every day at 4:15 a.m. with Noozhawk's top stories, hand-picked by the editors.