HB 21

Present law requires that a state tax of 4% be placed on the retail sale of food and food ingredients. This bill eliminates such tax. However, this bill does not change the tax rate for food and food ingredients sold as prepared food, alcoholic beverages, candy, dietary supplements, and tobacco, which is currently 7%. Present law authorizes local governments to levy an additional tax, beyond state tax, for the same privileges, as long as the tax does not exceed 2.75%. This bill authorizes local governments to continue to levy a tax of up to 2.75% on food and food ingredients. Present law requires revenue ge nerated from 0.5% of the tax rate on food and food ingredients, and prepared food, alcoholic beverages, candy, dietary supplements and tobacco be deposited in the state general fund and earmarked for education regardless of whether the tax rate for those i tems is reduced below 6%. This bill removes this provision. This bill requires the commissioner of finance and administration to make a monthly distribution to counties and municipalities in an amount substantially equal to the amount that would have b een allocated to the counties and municipalities but for the exemption from sales tax applicable to the retail sale of food and food ingredients. The allocation must be based on the reporting of exempt sales of food and food ingredients and any other dat a or information the commissioner deems relevant.