April 01, 2009

 

 California passes budget without tax on veterinary services - April 1, 2009

 
posted March 15, 2009
 
 

The state of California has dropped the idea of taxing veterinary services, at least in the near term.

A proposed tax on veterinary services was not part of a 17-month budget that the California Legislature passed Feb. 19, three months after Gov. Arnold Schwarzenegger first called a special session to address the state's financial emergency.

The governor had proposed, as one of many tax hikes, applying state sales taxes to veterinary services for the first time—but the California VMA organized a successful grassroots campaign opposing the measure.

"Requiring pet owners to pay a tax to care for their animals is bad public policy," said Dr. William A. Grant II, president of the CVMA, in response to state leaders removing the provision from the final budget bill.

The CVMA argued that extending the sales tax to veterinary services would endanger the health of both companion animals and production animals, increasing the cost of care by about 10 percent—depending on local sales taxes. The California Legislative Analyst's Office noted that a tax on veterinary services "would create inequities in the tax structure by taxing some services while leaving other similar services untaxed."

The CVMA encouraged veterinarians and animal owners to ask the governor and state legislators to drop the tax. Members of the governor's office received so many calls opposing the tax that they created a phone poll to track resistance to the measure.

Valerie Fenstermaker, CVMA executive director, said the tremendous outcry reached the governor and state legislators.

"They were bombarded with thousands of phone calls and e-mails and letters," Fenstermaker said. "A tax on veterinary services and the implications of that obviously weren't acceptable to the public or our members."

She said the economic downturn means more pet owners are struggling to keep their animals, even without an increase in the cost of veterinary care.

The CVMA will continue monitoring the state budget situation, Fenstermaker said, because legislators could revise the 17-month plan. Also, a special commission is reviewing the state's tax structure, and commission members have discussed the idea of service taxes in general.

The AVMA State Legislative and Regulatory Affairs Department, a part of the AVMA Communications Division, reported that the only states that currently collect taxes on veterinary services are Hawaii, New Mexico, and South Dakota. The tax rate in California would have been higher than in those states, however, if the governor's proposal had passed.

"We applaud the CVMA in taking the lead in opposition to this ill-conceived proposed tax, which would have provided real hardships for animal owners," said Adrian Hochstadt, JD, the AVMA's assistant director for state legislative and regulatory affairs. "For the same reason, we hope that other states will not look at taxing veterinary services as a quick fix for their budget deficits."