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.