By: Kamel H.B. No. 128
73R1422 CBH-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to an exemption from the sales and use tax for certain
1-3 property used in the development of a new or improved product.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Sections 151.318(a) and (c), Tax Code, are
1-6 amended to read as follows:
1-7 (a) The following items are exempted from the taxes imposed
1-8 by this chapter:
1-9 (1) tangible personal property that will become an
1-10 ingredient or component part of tangible personal property
1-11 manufactured, processed, or fabricated for ultimate sale;
1-12 (2) tangible personal property used or consumed in or
1-13 during the actual manufacturing, processing, or fabrication of
1-14 tangible personal property for ultimate sale if the use or
1-15 consumption of the property is necessary or essential to the
1-16 manufacturing, processing, or fabrication operation; <and>
1-17 (3) services performed directly on the product being
1-18 manufactured prior to its distribution for sale and for the purpose
1-19 of making the product more marketable; and
1-20 (4) equipment or supplies used in the research or
1-21 development of new or improved products, regardless of whether used
1-22 in an actual manufacturing, processing, or fabrication operation.
1-23 (c) The exemption does not include:
1-24 (1) machinery, equipment, or replacement parts or
2-1 their accessories having a useful life when new in excess of six
2-2 months;
2-3 (2) intraplant transportation equipment, maintenance
2-4 or janitorial supplies or equipment, or other machinery, equipment,
2-5 materials, or supplies that are used incidentally in a
2-6 manufacturing, processing, or fabrication operation;
2-7 (3) hand tools;
2-8 (4) office equipment or supplies, equipment or
2-9 supplies used in sales or distribution activities<, research or
2-10 development of new products,> or transportation activities, or
2-11 other tangible personal property not used in an actual
2-12 manufacturing, processing, or fabrication operation; or
2-13 (5) internal or external wrapping, packing, and
2-14 packaging supplies, as defined by Section 151.302(d), purchased for
2-15 a person's own use, stored for use, or used in wrapping, packing,
2-16 or packaging tangible personal property.
2-17 SECTION 2. This Act takes effect October 1, 1993.
2-18 SECTION 3. The importance of this legislation and the
2-19 crowded condition of the calendars in both houses create an
2-20 emergency and an imperative public necessity that the
2-21 constitutional rule requiring bills to be read on three several
2-22 days in each house be suspended, and this rule is hereby suspended.