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State Senator Ron Calderon Capitol Building #4088 Sacramento, CA 95814 SUBJECT: AB 1956 (CALDERON) STATE BOARD OF EQUALIZATION: SALES AND USE TAXES: TANGIBLE PERSONAL PROPERTY: DIGITAL PROPERTY REPORT – OPPOSE Dear Senator Calderon, I OPPOSE your AB 1956. AB 1956 imposes an expansive, unprecedented new INTERNET TAX on Californians who purchase digital media, including software, e-books, music, videos, cell phone ring tones, cable television and movies on demand. This will lead to increase costs of doing business in California. Some of the reasons I oppose AB 1956: Avoids the 2/3 vote requirement for a new tax. AB 1956 impermissibly avoids the 2/3 vote threshold required by Proposition 13 by ordering the Board of Equalization to draft a new regulation to tax digital media without providing underlying statutory authority. In other words, the bill is scored majority-vote because it ignores the fundamental requirement that regulations interpret existing law, and existing law does not tax digital media. AB 1956 “declares” there is existing authority to tax digital media by manipulating and stretching terminology in current statutes that provide for sales and use tax of tangible products. Digital media is nothing like tangible products, which is why it has never before been subject to tax. If statutory authority existed for the new tax regulation, no bill would be necessary. The claim of existing authority to tax digital media is clear grounds for legal challenge. AB 1956 sets a dangerous precedent for illegal enactment of a new tax by majority vote and an impermissible new tax on services, since delivery of digital media is often a service as much as a product Shuts out public-comment on the new regulation that will implement the new tax. AB 1956 expressly exempts the new unauthorized tax regulation from the regular rule-making process, meaning complete elimination of the regular public-comment process by which negatively-impacted consumers and businesses should have an opportunity to provide input and concerns.