Senate Committee Approves $1.3 Billion in Tax Increases : Revenue: Targeted are sales of candy, snack foods, newspapers and periodicals. State faces a deficit of $7 billion to $10 billion.

A divided Senate Revenue and Taxation Committee on Wednesday approved approximately $1.3 billion in carefully targeted sales tax increases, giving a shaky start to Gov. Pete Wilson’s tax plan.

Although the committee narrowly approved much of Wilson’s tax plan, it endorsed by a wider margin an array of other tax increases that do not carry the governor’s sponsorship.

The principal bill, aimed at raising $433 million for state and local governments over 15 months with new sales taxes on candy, snack foods, newspapers and periodicals, passed on a 5-to-3 vote, the bare majority needed for passage.

Wilson is also seeking to increase motor vehicle license fees and taxes on alcoholic beverages and to require withholding of income taxes for contractors and others. These are to be voted on separately.

The second and larger revenue-raising bill--a Democratic initiative proposed independent of Wilson--passed 6 to 2. It would generate more than $900 million with new taxes on motion picture leases, linen supplies, custom computer programs, the sale of boats and aircraft and certain types of fuel for ships and planes.

Both bills were sent to the Senate Appropriations Committee.

Lawmakers approved the larger tax bill after the Wilson Administration dropped its opposition, indicating the Republican governor may be willing to accept a larger tax bill than the one he asked to be introduced.

Wilson proposed the tax increases, along with a host of cuts in health, welfare and other programs, to close a $7-billion revenue shortfall the state is expected to experience over the next 18 months. The state’s nonpartisan budget analyst estimates that the budget shortfall will be nearly $10 billion and has criticized the governor’s tax-and-expenditure program for not going far enough.

Democratic opponents argued that by focusing on the sales tax, Wilson’s program would hurt low-income Californians more than wealthier residents because a greater share of the former’s income goes to buy taxable goods.

Democrats also argued that the two bills, together, will not make a significant dent in the budget problem. Sen. Ralph C. Dills (D-Gardena), who voted against both bills, said he favored an across-the-board sales tax increase, as opposed to targeting individual products. He noted that a penny increase in the sales tax would generate about $3 billion annually in new revenue. Currently, the sales tax is 6 cents to 7 cents for each $1 in taxable sales, the variation depending on whether voters have approved special local sales tax increases.

Several lawmakers objected to the proposed tax on newspapers. They warned that the tax would fall especially hard on small, community newspapers. Because many of these newspapers are given away, the tax would be based not on the circulation price that other newspapers charge but on the cost of ink, newsprint and other raw materials that go into publication of the papers.

Sen. Ruben S. Ayala (D-Chino) said that even though the largest newspaper in his district did not endorse his election, he opposed the tax on grounds it would set a bad precedent. News and editorial content, Ayala said, “is not a luxury, it is something we must have.”

But Sen. Wadie A. Deddeh (D-Bonita), chairman of the committee, insisted that newspapers put out a commodity that “is no different than any other product that we tax.” He noted that the state taxes books and textbooks.

Deddeh said that neither the newspaper tax bill nor the larger tax bill would have come before the committee if the state were not experiencing one of its worst budget crises.

Deddeh refused to allow testimony from officials representing industries that would be hit by the taxation. Their representatives were allowed to speak at a hearing last week.

After the hearing, Michael B. Dorias, a lobbyist for the California Newspaper Publishers Assn., said he will oppose the bill during the rest of its committee hearings in both the Senate and Assembly.

Committee members exempted California’s lone major shipbuilding company, National Steel and Shipbuilding Co. of San Diego, from the proposed tax on boats and ships. During an earlier hearing, an official of Matson Navigation Co. said the tax would have added $5 million to $7 million to the cost of a container ship NASSCO is constructing for the firm. Matson warned that had the tax been in effect, the firm might not have gotten the contract.

Matson officials said shipbuilders operated in only three other states and in each state they enjoyed exemptions from the sales tax.

Sen. Becky Morgan (R-Los Altos Hills) said she voted against the larger sales tax bill because she opposes some of the individual elements of the bill, such as the proposed tax on aircraft sales.