Sales Tax on Veterinary Services

California may impose a sales tax of as much as 10.25 percent on veterinary services if a proposed economic plan from Gov. Arnold Schwarzenegger is passed.

Published: November 11, 2008
By Christie Keith

California may impose a sales tax of as much as 10.25 percent on veterinary services if a proposed economic plan from Gov. Arnold Schwarzenegger is passed.

The governor's plan would raise the sales tax across the board – to as high as 10.25 percent in some areas – and extend the tax to services such as furniture repair, amusement park and sporting event entrance fees and golf, as well as medical care for animals.

"I don't think getting medical treatment for your cat or your dog should even begin to correlate with getting furniture repaired or playing golf," said Valerie Fenstermaker, executive director of the California Veterinary Medical Association.

"Veterinary medicine is not a service you'd lump in with luxuries," said Adrian Hochstadt, assistant director for state legislative and regulatory affairs for the American Veterinary Medical Association. "People of all income levels own pets, and pet ownership should be affordable in this country. It's a bizarre comparison."

H. D. Palmer, deputy director of the California State Department of Finance, told the VIN News Service that the state didn't focus on services it considered frivolous, but service businesses where a mechanism for collecting sales tax for products was already in place. "Like car repair, where the labor is not taxed, but parts are," he said. "We looked for situations where sales tax was being collected already."

Fenstermaker was skeptical of that explanation, saying that although human physicians usually don't sell products and collect sales tax, many other health professionals do.

" I'm not sure why veterinarians were singled out, but it really doesn't make any sense," she said.

Veterinary organizations are concerned that economic hard times and the increased cause of the tax will put additional financial strain on families, and hurt animals. "Especially in today's economy, the last thing we want is to increase costs for families," said Hochstadt. "We're already seeing, in states with very weak economic situations, that animal abandonment is up. This will only make it worse, which makes it a curious move at this point."

"People will tend to have their dog or their cat euthanized, since costs will have increased dramatically," Fenstermaker said.

Families might be hurt another way, too, since veterinary medicine is part of the public health system. Many diseases are transmissible between  humans and animals, and last year's pet food recall demonstrated that pets can be the first victims of a food safety crisis that affects humans as well. But Palmer pointed out that many human health services are also being cut.

"I'm sure the CVMA doesn't like it," he said. "But we clearly understand that these actions in this area, or in the expenditure reduction area, where we are directly affecting health and human services, could very well have difficult consequences. That said, California is facing an unprecedented drop in its revenues with the stock market crash and the fall in housing prices. We have to address this crisis before deeper reductions in state services are necessary."

A similar proposal in the state of Michigan was defeated last year, and the CVMA wants to see the same thing happen in California.

"Our lobbyist hit the ground running, and we will be looking at every way possible to keep it from being included in the governor's proposal," said Fenstermaker. "We've even started hearing from members of the public, who are very concerned about this issue. But we have a good presence in Sacramento, so we're optimistic."

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