Senator Alan Lowenthal introduced SB 1243 on Thursday, a bill that is expected to make permanent a partial sales tax exemption on the purchase of marine fuel.
The move will help to protect a significant amount of high-paying blue-collar jobs statewide and help California ports stay competitive, according to a press release from the office of Lowenthal.
Major ports across the state, including Long Beach and Los Angeles, are some of the leading maritime “gas stations,” in the world and the marine fuel industry supports a workforce of more than 1,000 workers statewide.
Marine fuel, similar to most products in California, is subject to the state's sales tax, a tax that adds to the cost of marine fuel.
Consequently, that tax encourages the purchase of marine outside the state by ocean-going vessels. To make California marine sales competitive, the state currently offers a partial sales tax exemption on maritime fuel sales.
Under the newly-introduced exemption, the state does not tax fuel purchased in in California waters, regardless if it is consumed outside of the state.
SB 1243 would make the tax exemption permanent by eliminating the current expiration date of January 1, 2014.
The exemption requires renewals every five years, and has expired on two previous occasions, once in 1992 and once in 2002.
The previous temporary expirations of the exemption, according to the state Legislative Analyst, caused marine fuel sales statewide to plummet nearly 50 percent. The past expirations also resulted in the loss of hundreds of high-paying blue-collar jobs related to the port industry.
“We've seen on two occasions that removing this sales tax exemption will cost our region jobs,” Sen. Lowenthal said.
“No other maritime port in the U.S. currently charges sales tax on marine fuel. This is about protecting California jobs and keeping California ports competitive,” Sen. Lowenthal said.