California Business Pleas For Immediate Tax Cuts

by Leroy Baker, Tax-News.com, Washington

02 November 2001

Californian business executives will meet with Governor Gray Davis today who is conducting his first economic summit to press him into cutting taxes and spend more more money to help spur the state's ailing economy.

According to reports from the Wall Street Journal, there has been mounting pressure on Governor Davis to dip into the California State coffers since the September 11 terrorist attacks. The Governor has promised that he will work in conjunction with the business sector but will not implement any long term measures. 'The economy will be in full recovery by 2004. We don't need [recovery] programs that go on for 20 years,' he predicted.

The meeting will take place at Walt Disney Co. Studios in Burbank, Calif., where business representatives will request a one-year suspension of the state sales tax on manufacturing equipment. Currently California provides a tax credit on investments in manufacturing equipment through a program worth around $375 million to $400 million each year.

Governor Davis will also be asked to add the one-year sales-tax moratorium on top of the above figures which state tax officials estimate could cost a minimum of $850 million. A two-year moratorium on new or raised business fees and regulations is also on the agenda and the California Chamber of Commerce will call for a targeted tax-relief package tied to increased spending on tourism and public safety. 'The quickest way for government to stimulate an economy is through capital outlay,' claimed Allan Zaremberg, president of the 13,000-member group. He commented that California's economy is so diversified 'that you need more than one stimulus.'

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