CALIFORNIA GOVERNOR VETOES BUNKER TAX EXEMPTION

Further to our article in Weekly NEWS No. 39 of 27 September, California Governor Gray Davis has unfortunately vetoed Senate Bill 145, passed by the California Senate and House, which would have extended until 2013 the current exemption from sales tax for bunkers sold to ships in California ports and consumed out of state.

In his letter to the Senate he gives the following reason for his veto ‘While I would ordinarily sign this measure, the state’s very difficult financial condition requires me to veto this bill because it would result in total state and local revenue losses in the range of $22.3 to $35.5 million depending on the consumption of bunker fuel.’

 

The sales tax is now due to come into effect on 1 January 2003. The amount of revenue accruing from it will, of course, depend on whether shipowners continue to purchase bunkers in California. It will be interesting to see the reaction, if any, from the California business interests.

 

The California Senate Bill 145 can be viewed here, and The Governor's Veto can be viewed here.