What Do Repub Cong. Candidates Gary DeLong & Steve Kuykendall Think of Dem Cong. Candidate / State Sen. Alan Lowenthal's Bill To Let Marine Fuel Avoid Full Amount Of CA's Sales/Use Tax? We Asked Them And...

(Feb. 28, 2012, updated Mar. 2) -- What do Congressional candidates Gary DeLong and Steve Kuykendall think of SB 1243 introduced last week by Congressional candidate / state Senator Alan Lowenthal (D., LB-Paramount) that would extend indefinitely a maritime industry-sought tax break that lets shippers and large vessel operators avoid paying the full amount of CA's sales/use tax on their purchases of marine fuel (including bunker fuel) in CA?

LBReport.com asked them by email yesterday (Feb. 27).

SB 1243 (text as introduced, click here) would continue to exempt from state sales/use tax marine fuel bought in CA but consumed outside CA waters. (Detailed LBReport.com coverage, click here.)

Candidate DeLong emailed us a response last night from DC: "While I support exempting sales tax on marine fuel, I would also like to see the State Legislature support California families. Currently Californians pay one of the highest gasoline taxes in the country at a rate of over $0.65 per gallon."

Also, on January 22, 2008, Councilman DeLong voted against a measure agendized by Councilwoman Gerrie Schipske that asked the Council's State Legislation Committee to consider supporting reinstatement of the full sales/use tax on bunker fuel. A Council majority voted the item down 3-6: Yes: Schipske, Reyes Uranga, Gabelich; No: B. Lowenthal, S. Lowenthal, DeLong, O'Donnell, Andrews, Lerch.

As of dawn on Feb. 28, LBReport.com hadn't received a response to our email from Mr. Kuykendall's campaign inviting comment, but on March 1 we did get an emailed statement which we provide below. We also include below [as we did originally on Feb. 28] Mr. Kuykendall's voting record on the issue while he was in the state Assembly.

[Mar. 1 emailed statement text] When I introduced the permanent exemption for this tax in 1996 it was aimed at keeping our harbors competitive and people working. We had put the tax on our bunker fuel and saw dramatic drops in purchases of fuel and declines in ship calls at the Los Angeles and long Beach harbors. With more than 5000 ships calling at these harbors every year the sale of bunker fuel is an important business activity. Bunker fuel is a world commodity and the size of vessels today allows them to purchase fuel wherever they get the best price on their circuit to ports around the world.

If bunker fuel is fully taxed, the tax alone can account for a 5% increase in operating costs of a vessel. Vessel operators will go to great lengths not to have that happen. As soon as we put the tax on vessel traffic will decline and bunker fuel sales will decline even more as the ships refuel at other ports outside of California. We lose not only the refueling business but many other activities that come with a port call the operator will just skip. The tax should be eliminated period.

The ports account for 1 in 8 jobs in our region. The list of jobs effected by the this tax is long, i.e. tug boat operators, long shore men, marine fuel terminal employees, harbor pilots and many others who sell supplies to these vessels when they stop for fuel. The vast majority of the fuel sold is burned outside of California and the United States. The benefits of these sales to our local economy far outweigh any loss of tax receipts on the fuel especially when considering the fuel is consumed outside our borders.

In 1997, then-Assemblyman Kuykendall introduced AB 120 to make permanent [no sunset] a measure exempting ship bunker fuel from CA sales/use tax...and co-authored a second bill -- AB 366 (Havice) -- that exempted bunker fuel from CA's sales/use tax with a Jan. 2002 sunset date. The measure with the sunset date passed and was signed into law in 1997.

When the measure expired in 2002, shipping industry interests sought to have the tax break restored and turned to then state-Senator Betty Karnette (who'd backed the 1997 sales tax exemption). Senator Karnette and Senator Don Perata, joined by then-Assemblyman Lowenthal as a co-author, used Sacramento's "gut and amend" procedure to enact a measure that exempted bunker fuel from the full amount of CA's sales/tax until 2014.

Sen. Lowenthal's now-proposed measure would continue that exemption indefinitely.

Related LBReport.com coverage:

State Sen. Alan Lowenthal Introduces Bill That Would Let Ship Fuel (Including Bunker Fuel) To Continue Avoiding Full Payment Of CA's Sales/Use Tax