California General Assembly

Assembly Joint Resolution No. 70


[Filed with Secretary of State July 15, 1992.]

WHEREAS, Public support has generated remarkable growth in glass, metal and paper recycling; and

WHEREAS, Special tax treatment for virgin materials may decrease the use of recycled materials; and

WHEREAS, Federal tax laws presently allow a mining firm to deduct a fixed percentage of annual gross income from the sale of or defer development and exploration expenditures in connection with mineral mining ; and

WHEREAS, Glass is made primarily from minerals, such as silica sand, feldspar, limestone, and natural soda ash; and

WHEREAS, Special tax treatment provided to a mining firm improves cash flow, reduces the present value of taxes paid, and could be considered an interest-free loan from government, which may favor use of virgin mineral and metal resources over recycled glass or metal; and

WHEREAS, Federal tax laws presently allow private timber growers to (1) amortize forestation or reforestation expenditures, including seed, labor, and equipment costs, up to ten thousand dollars ($10,000) per year over a seven-year period, (2) receive a special 10 percent tax credit for direct reforestation costs, and (3) distribute interest for capital costs over the entire timber production period; and

WHEREAS, The federal government assists the timber industry by selling timber on federal land at below cost, in some instances, thereby possibly resulting in below-cost wood pulp, and by providing technical assistance programs designed to improve timber management, including, for example, insect and disease control and fire protection; and

WHEREAS, Paper is made from wood pulp, which comes from timber; and

WHEREAS, Special tax treatment provided to a timber grower defers taxes to the future, improves cash flow, reduces timber prices, and could be considered a no-interest, long-term government loan, which may favor use of virgin timber resources over recycled paper and newsprint; and

WHEREAS, The sale of national forest timber rights at prices far below their actual value also curtails use of recycled paper; and

WHEREAS, Special tax treatment shifts a portion of the cost of obtaining virgin materials form the consumer to the taxpayer and, therefore, makes virgin materials appear less costly in the marketplace than they really are; and

WHEREAS, Virgin material producers enjoy tax benefits not available to recycled materials, thus creating some inefficiency in the market; and

WHEREAS, Any increase in the use of recycled materials in manufactured products requires a level playing field with virgin materials; and

WHEREAS, The estimated cost to the federal government for special tax treatment for virgin timber and minerals alone was eight hundred four million dollars ($804,000,000) for fiscal year 1989, according to the Congressional Office of Technology Assessment; and

WHEREAS, One method to increase the use of recycled materials in manufacturing processes is to provide tax incentives to motivate industries to substitute recycled materials for virgin materials; now, therefore, be it

Resolved by the Assembly and the Senate of the State of California jointly,

That the federal government level the playing field for recycled materials used in product manufacturing by (1) phasing out tax subsidies for specified virgin materials, (2) taxing specified virgin materials contained in selected items, (3) providing tax advantages for recycled materials used in manufacturing products, or (4) any combination of these measures; and be it further

Resolved, That the Chief Clerk of the Assembly transmit copies of this resolution to the President and Vice President of the United States, to the Speaker of the House of Representatives, and to each Senator and Representative from California in the Congress of the United States.


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