BILL ANALYSIS H.B. 366 By: Hartnett (Brown) Finance 05-16-95 Senate Committee Report (Unamended) BACKGROUND Section 11.14, Tax Code, establishes ad valorem taxation for income producing tangible personal property, regardless of its value. When property has a value less than $500, the tax generated may not cover the cost of the collection. For properties with very low taxable values, taxing authorities are required by law to assess and collect a tax even though they may lose money. PURPOSE As proposed, H.B. 366 establishes a minimum value of $500 for ad valorem taxation of income-producing tangible personal property and mineral interest. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not grant any additional rulemaking authority to a state officer, institution, or agency. SECTION BY SECTION ANALYSIS SECTION 1. Amends Chapter 11B, Tax Code, by adding Sections 11.145 and 11.146, as follows: Sec. 11.145. INCOME-PRODUCING TANGIBLE PERSONAL PROPERTY HAVING VALUE OF LESS THAN $500. (a) Exempts a person from taxation of the tangible personal property the person owns that is held or used for the production of income if that property has a taxable value of less than $500. (b) Provides that the exemption provided by Subsection (a) applies to each separate taxing unit in which a person holds or uses tangible personal property for the production of income, and, for the purposes of Subsection (a), all property in each taxing unit is aggregated to determine taxable value. Sec. 11.146. MINERAL INTEREST HAVING VALUE OF LESS THAN $500. (a) Entitles a person to an exemption from taxation of a mineral interest the person owns if the interest has a taxable value of less than $500. (b) Applies the exemption provided by Subsection (a) applies to each separate taxing unit in which a person owns a mineral interest and, for the purposes of Subsection (a), all mineral interests in each taxing unit are aggregated to determine value. SECTION 2. Amends Section 11.43(a), Tax Code, to make a conforming change. SECTION 3. Effective date: January 1, 1996, but only if the constitutional amendment proposed by the 74th Legislature, Regular Session, 1995, authorizing the legislature to exempt from ad valorem taxation personal property and mineral interests having a value insufficient to recover the administrative costs of collecting the taxes is approved by the voters. Provides that this Act has no effect if that amendment is not approved by the voters. SECTION 4. Emergency clause.