Retailers Doing Slow Burn Over Oil Excise Tax : * Levy: Sellers are worried they will have to increase their record-keeping and prices because of state’s new charge.

A new state excise tax on oil and lubricants that took effect Friday immediately began frustrating and even outraging retailers who fear that the 4-cents-a-quart levy will add to their paperwork and force them to raise prices.

The tax, being levied to raise funds for oil recycling programs, applies only to the makers of oil products.

But the State Board of Equalization has mailed letters to 162,000 retailers, distributors and tuneup centers, asking them to begin keeping records of how much oil they sell and telling them that the law defines an oil manufacturer as anyone who sells lubricating or industrial oils.

It is that wording that has left many retailers befuddled.

“Am I supposed to sit with paper and pencil, keeping track of every sale I make?” said Arlene Schafer, co-owner of B&J; Automotive Parts in Garden Grove. “It’s a sneaky, underhanded thing . . . to do.”

The letter said record-keeping was to begin Friday and that manufacturers would have to pay the new tax each quarter, starting Oct. 1.

“Everybody interprets it a little differently,” said Jack Mullins, owner of Yorba Linda Auto Parts. “Nobody even told us what they are going to do with the money. Are they going to pay for a chief executive’s salary? I don’t even know. It’s depressing.”

Other store owners said that they might drop oil products altogether if they have to collect the tax directly from their retail customers.

“Oil is high enough,” said Russ Hobbs, the manager of Edwards Engine and Auto Parts in Fullerton. “We have a hard enough time selling it. This new tax is going to make it a lot worse.”

But authors of the bill, passed late last year, say that the tax will be levied directly against the oil product manufacturers and is not an additional sales tax. A consultant who helped draft the bill said the wording that defines a retailer as an oil manufacturer was an error that will be corrected.

Even so, many retailers are predicting that oil companies will pass the tax on to the distributors anyway and that consumers will ultimately bear the cost.

“I’m sure they’re going to raise their prices,” said Ron Brousseau, a customer service representative for Southern Counties Oil in Orange. “It will all roll downhill.”

Paul Thayer, consultant to the state Assembly’s Natural Resources Committee, insisted Friday that only oil products manufacturers will be hit with the tax and the additional paperwork.

“We spent two years trying to get this bill right, and one of our biggest concerns is that the paperwork and bureaucracy be kept to a minimum,” Thayer said. The erroneous definition, he says “is an unfortunate glitch” and legislation to clear up the confusion is being drafted.

So far, the Board of Equalization has received hundreds of calls from businesses that received the letter, said Dell Anderson, administrator of the special taxes division.

The tax is expected to raise $26 million in the first year, to be used for county and city oil recycling programs, as well as for oil disposal stations at private businesses.

The levy came in response to statistics that show California residents and businesses dispose of about 50 million to 80 million gallons of used oil in storm drains and vacant lots each year, creating a potential environmental hazard.

Meanwhile, the number of places used oil can be brought for recycling has fallen from 2,400 in 1985 to 700 today, mainly because of the cost of running such an operation, Thayer said.

Under the new law, the only retailers who will be directly charged a tax will be those who buy their oil products from out of state. That provision is designed to keep retailers from crossing state lines to get cheaper oil, Thayer said.

On Friday, several stores and lube centers in Orange County reluctantly began recording oil sales. Some even raised prices in anticipation of being told to forward the 4-cents-a-quart tax to Sacramento.