June 24, 1991
TO: BOARD OF GOVERNORS NO. 45-91
CALIFORNIA MEMBERS ONE PER COMPLEX
CALIFORNIA INVESTMENT ADVISER MEMBERS
CALIFORNIA ASSOCIATE MEMBERS
RE: CALIFORNIA BUDGET PASSES WITHOUT SERVICE TAX
__________________________________________________________
The Institute is pleased to inform you that the California
Legislature approved a budget bill on June 20, 1991 that does not
include a service tax on financial services. Earlier this year,
both Governor Wilson and the California Legislature considered a
variety of measures to raise revenue to alleviate an approximate
$14.3 billion budget shortfall. Included in the Democratic
Senate/Assembly budget proposal was a service tax on financial
services which may have covered brokerage transactions and
investment advisory fees paid by mutual funds and other clients.
The Institute attended the Assembly Revenue and Taxation
Committee meetings and met with members of the California
Assembly during the latter stages of the budget process to ensure
that the financial services tax was not included in the final
budget. The budget plan ultimately approved by the Legislature
includes an increase in the general sales tax of 1-1/4% and an
increase in utility taxes and motor vehicle fees. Also included
in the budget plan are new taxes on newspapers, snack foods,
bottled water and other items.
* * *
We will keep you advised of further developments.
Patricia Louie
Assistant General Counsel