Morain: Reading Their Lips

The oil industry is so last century, with its pumps, spills and exhaust.

Amazon.com couldn't be more 21st century, with its cool technology that instantly delivers electronic books on sleek devices, at a discount.

Images aside, there is not a dime's worth of difference between the two when it comes to taxation. They aggressively fend off any effort to impose taxes on them, and they win.

Republican lawmakers repeatedly say California doesn't have a revenue problem; it has a spending problem. The state often does spend stupidly.

But the tax system is a mess, too, as became apparent last week.

Lawmakers grappling with the perennial budget deficit contemplated two tax proposals, one aimed at the oil industry and another directed at Internet companies.

First, the gasoline tax idea.

Democrats want to let counties place before voters local gasoline tax hikes. Voters would approve the measures by simple majorities and earmark the money for alternatives to internal combustion engines, including public transit and bike paths. The money also could be used for transit operations, wages, pensions, consultants, whatever.

The idea seems direct enough. Voters would have final say. But nothing related to taxation is simple, as lobbyists from industry and anti-tax groups made clear at a Senate hearing last week.

Critics implied that local government couldn't be trusted to manage the money. There's another problem. California has a long-standing rule that tax hikes require a two-thirds vote. Industry almost surely would sue or mount a referendum to challenge any legislative attempt to permit counties to raise taxes by majority vote.

Even if lawmakers were to approve the measure, oil companies have an insurance policy in the corner office of the Capitol. Gov. Schwarzenegger almost surely would veto it.

"We're confident that the governor will do the right thing," said Tupper Hull, spokesman for the Western States Petroleum Association, the trade group.

The upshot: Don't expect to see a gasoline tax on your local ballot any time soon. Oil money speaks loudly in California. Oil companies have spent $100 million on campaign donations and $89 million more on lobbying since 2000. That's tough to beat.

The oil industry long has played power politics. Amazon, by contrast, has a very different public face, one unsullied by unseemly things like lobbying. But as it goes about its business, Amazon is racking up ever bigger sales, and it is fighting any effort to force it to collect state sales taxes.

Years ago, sales tax revenue accounted for half the state's budget. But the sales tax is antiquated. The state taxes the sale of many goods but not services. As California has become a service economy, sales tax revenue has fallen to less than 29 percent of the pie.

Given Republican opposition to taxes and lack of unison among Democrats, lawmakers won't muster a two-thirds majority to tax movie tickets or greens fees, let alone accounting or legal services. But you'd think the state could figure out how to tax Internet sales. It can't.

The state Senate last week approved legislation to force Amazon to collect a sales tax. The measure could generate $150 million annually. But just as you won't see a gas tax on your ballot, you likely won't see sales tax charges on your Amazon invoice any time soon. Schwarzenegger vetoed similar legislation last year.

Amazon's lobbyists aren't making their arguments in public.

Instead, they meet with lawmakers privately. But Republicans channel the company line, warning in the Senate debate that requiring Amazon to collect sales taxes would prompt it to close operations in the state, cease advertising on California-based Web sites and cost jobs.