April 19, 2013

Hand me a bag

By Anthony L. Francois Senior Attorney

Today, Pacific Legal Foundation, on behalf of itself and the Howard Jarvis Taxpayers Association, filed this letter, asking the California Supreme Court to grant review in Schmeer v. County of Los Angeles, which is a case about a paper bag, a dime, and the state constitution.  In Schmeer, the California Court of Appeal said that it is not a “tax” when the government forces a shopper to pay the grocery store a fee (ten cents) for every paper shopping bag the store gives them, and then tells the store how to spend the money (on materials to encourage shoppers to use reusable bags instead).

Such a scheme should be prohibited by Proposition 26, which defines a “tax” as “any levy, charge, or exaction of any kind.”  The voters of California enacted Proposition 26 in 2010 because they had had enough of new taxes being dressed up as fees for new regulatory programs.  By disguising taxes as regulatory fees, state and local governments were successfully avoiding legislative and voter approval requirements in the California Constitution.  In response, Proposition 26 makes it as clear that, with very limited exceptions, any new “levy, charge, or exaction of any kind” requires a supermajority vote in the state legislature, or voter approval in the case of local taxes.

So imagine the public’s surpise when Schmeer says the bag charge is not a tax because the grocery store keeps the money (which the shopper is forced by law to pay), and spends the money itself (on things that law requires it be spent on), without the money ever being deposited in a government account.  Essentially, Schmeer says that the government can raise your taxes all day long without voter approval if it finds another private party that it can order to collect the taxes and carry out the government program.  This is an important case for the state Supreme Court to grant review and reverse the appellate court’s absurd conclusion.

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