38561.5.
(a) (1) On or before January 1, 2021, the state board, in consultation with the California Department of Tax and Fee Administration, shall submit a report to the Legislature on the results of a study to propose, and to determine the feasibility and practicality of, a system to replace the tax imposed pursuant to the Sales and Use Tax Law (Part 1 (commencing with Section 6001) of Division 2 of the Revenue and Taxation Code) with an assessment on retail products sold or used in the state based on the carbon intensity of the product to encourage the use of less carbon-intensive products.(2) The state board and the California Department of Tax
and Fee Administration shall consult with other agencies to address questions that the state board and the department would not be able to address otherwise.
(2)
(3) The report required pursuant to paragraph (1) shall be submitted in accordance with Section 9795 of the Government Code.
(3)
(4) Pursuant to Section
10231.5 of the Government Code, the requirement to submit the report pursuant to paragraph (1) shall be inoperative on January 1, 2025.
(b) In conducting the study, the state board shall do all of the following:
(1) Identify a feasible and practicable mechanism for assessing a carbon tax on retail products in lieu of the sales and use tax.
(2) Identify, to the extent feasible, the carbon impacts of retail products subject to the Sales and Use Tax Law.
(3) Identify appropriate product types or categories that would provide the greatest carbon emission reduction benefit if an assessment on retail products based on carbon intensity is imposed on the product in lieu of the sales and use tax.
(4) Identify carbon emission reduction benefits that may be realized through the imposition of an assessment on retail products based on carbon intensity of products in lieu of a sales and use tax.
(5) Ensure that the proposed system to replace the sales and use tax would generate an equivalent amount of revenues generated by the sales and use tax, making the change from a sales and use tax to a carbon tax revenue neutral.
(6) Identify necessary statutory changes to implement the proposed system.
(7) Identify and explore the impacts of a revenue neutral carbon tax on various income levels and ways to ensure that it does not disproportionately impact low-income consumers.
(8) Identify to the extent feasible a cost estimate for the private sector to comply with the new tax system and identify the needed technologies and systems for compliance.
(c) (1) The state board shall revise, as necessary, the 2017 scoping plan prepared pursuant to Section 38561 to reflect the carbon emission reduction benefits that may be realized through the imposition of an assessment on retail products in lieu of a sales and use tax.
(2) The state board shall consider the results of the study conducted pursuant to subdivision (a) in any updates to the scoping plan.