College students who purchase books at campus bookstores could save a substantial amount of money. The California Assembly Committee on Revenue and Taxation has passed AB 1178, a bill by Assemblyman Marty Block (78th Assembly District, San Diego) to support California’s college students. The bill will reduce the sales tax on textbooks and school supplies at college bookstores across the state by $120 million annually.
Students can expect a partial exemption from July 2011 through June 2012, and then a full exemption of the state’s portion of the sales tax from June 2012 through December 2014.
Only bookstores affiliated with California Community Colleges, CSU and UC campuses will be able to offer exemptions.
Assemblyman Block said Friday that AB 1178 will not disrupt booksellers at all. “It will make the final cost at the cash register go down for students purchasing textbooks, not the actual product price,” he said.
The difference could seem slight per item, but the National Association of College Stores’ (NACS) 2008 “Student Watch” publication estimated a state-wide average expenditure of $702 on textbooks per student in the last year. Eight percent sales tax added means California students are paying an extra $55 or more on their textbooks each year.
And don’t forget supplies. The same publication estimated $582 annually per college student. While factors like work load and subject matter make large differences, 26 percent of students said they usually cover course material costs with scholarships and grants, and on average, 45 percent of the costs were covered for those students, according to NACS.
University of California, San Diego sophomore Kaitlin Marie spends more than 45 percent of her quarterly loan on textbooks and supplies.
“It’s stupid that every quarter we buy books that are extremely expensive for only 10 weeks, then try to sell them back. Most of the time I can’t sell mine back because the author has another edition out. It makes it hard for professors, but even harder for the students…I just want to get out of here and finish school. It’s too expensive,” she said.
According to Block, The Public Policy Institute of California estimates one million bachelor’s degree holders are needed by 2025 to remain economically competitive. Studies also show that education levels are tied to a person’s salary.
“The more education, the higher the salary; the higher the salary, the more revenue coming into the state. Associate level and other education programs at community colleges and bachelor’s degrees at the CSU and UC are an essential element of our workforce. Anything that I can do to help make college more affordable and help students graduate is something from which both they and California will benefit,” Block said.
Cal Poly senior, John-Paul Charlebois, said he would be glad to keep the money he would otherwise spend on tax.
“I dont think that the small percentage that taxes make up in our education expences would make much of a difference, but I’m all for saving money…if taxes are about 10 percent and 10 percent of $3,000 is $300 , I can do a lot with an extra $300,” he said.
As students pay taxes, almost all corporations in California pay their fair share of the state’s 8.84 percent corporate tax rate on profits as well. Some booksellers have hired smart accountants to help them figure out ways to effectively lower what they owe in taxes. Misusing a provision in the tax calculation code (the “waters edge” calculation) enables them to shelter profit in fictional subsidiaries overseas.
“It is technically permissible, but morally wrong,” Block said. “It should be illegal because the ‘waters edge’ calculation was set up to exclude income from bona fide corporations doing business in another country, not by sham affiliates designed to park income from business performed in California. My bill will close this loophole.”
California college students won’t see any reductions or exemptions for more than a year. Until then, buying online could the best option for the best price. Perhaps in June 2010 students will return to the campus bookstores and foot a more reasonable bill.