BILL ANALYSIS



C.S.H.B. 1807
By: Rodriguez/et al.
4-28-95
Committee Report (Substituted)


BACKGROUND

Chapter 151, Subchapter H, provides exemptions from the limited
sales, excise, and use tax.  Currently, aircraft that are used for
the exclusive purpose of training or instructing pilots in a
licensed course of instruction are exempt from the tax.  However,
aircraft that are operated by licensed carriers of persons or
property are also exempt from the tax for repair, remodeling and
maintenance services, and machinery, tools and equipment used or
consumed exclusively in the repair remodeling or maintenance of
aircraft components or parts.

PURPOSE

This bill extends the sales and use tax exemption for aircraft to
allow people engaged in flight instruction to have the same tax
exemptions as those licensed to carry passengers.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly
grant any additional rulemaking authority to a state officer,
department, agency, or institution.

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Sections 151.328 (Aircraft), Subsections (a),
           (b), (d), and (e), Tax Code.

           (a) Expands the exemption granted in Subsection (a)(2). 
           The additional language clarifies that an aircraft is
           exempted from the taxes imposed by this chapter if it
           is sold to a person who has a sales tax permit issued
           under this chapter and uses the aircraft for the purpose
           of providing flight instruction that is: (i) recognized
           by the FAA; (ii) under the supervision of an FAA
           certified instructor; and (iii) is designed to lead to
           a pilot certificate or rating issued or required by the
           FAA.

           (b) The exemption is amended by clarifying that any
           repair, remodeling, and maintenance service that is
           performed on an aircraft, including an engine or other
           component part of the aircraft, operated by a person
           described by Subsection (a)(1) or (a)(2) is exempted
           from the taxes imposed by this Chapter.

           (d) The exemption covering machinery, tools and
           equipment is expanded to include supplies.  This
           exemption is granted to persons described by Subsection
           (a)(1) or (a)(2).

           (e) Exempts from the taxes imposed by this chapter,
           tangible personal property that is permanently affixed
           or attached as a component part of an aircraft owned or
           operated by a person described in Subsection (a)(1) or
           (a)(2), or that is necessary for the normal operations
           of the aircraft and is pumped, poured, or otherwise
           placed in the aircraft.

SECTION 2.     This Act takes effect on the first day of the first
               calendar quarter beginning on or after the date
               that it may take effect under Section 39, Article
               III, Texas Constitution.  Additionally, the change
               in law made by this Act does not affect taxes
               imposed before the effective date of this Act.

SECTION 3.     Emergency clause.

COMPARISON OF ORIGINAL TO SUBSTITUTE

H.B. 1807 expands the definition of aircraft for exemption
purposes.  C.S.H.B. 1807 does not contain such language.

C.S.H.B. 1807 alters the requirements for an aircraft to be used to
provide flight instruction to require that the instruction be under
the supervision of an FAA certified instructor.  H.B 1807 does not
include such language.

SUMMARY OF COMMITTEE ACTION

Public notice was posted in accordance with the rules, and a public
hearing was held on March 28, 1995.  Representatives Rodriguez and
Wohlgemuth explained the bill.  H.B. 1807 was referred to the
Subcommittee on Administrative Tax.

On April 27, 1995, the committee met in a formal meeting, and H.B.
1807 was recalled from subcommittee.  The committee considered a
complete substitute by Representative Craddick.  Without objection,
the committee adopted C.S.H.B. 1807.  By a record vote of 8 ayes,
0 nays, 0 present not voting and 3 absent, the committee voted to
report H.B. 1807 to the House as substituted with the
recommendation that it be sent to the Local & Consent Calendar, and
that it do pass.

     Testimony received in favor of the bill (3/28/95):
           Ben Harvey, representing himself and Friends of Flight
           Schools in Texas
           Norman H. Scroggins, representing himself
           Louis Pike McCasland, Jr., representing himself and the
           Texas Assn. of General    Aviation
           Maybelle Fletcher, representing herself
           Robert Edward Hazlett, representing himself and Friends
           of Flight Schools in     Texas
           Don Kuehn, representing himself and the Professional
           Instructors Assn. of San    Antonio
           Beth Ann Jenkins, representing herself
           Andres C. Gutierrez, representing himself and the
           members of the University     Flying Club
           Jimmy Lynn Wright, representing himself
           James L. Fletcher, representing himself
           Michael W. Davila, representing himself

     Neutral testimony received on the bill (3/28/95):
           Wade Anderson, representing the Comptroller of Public
           Accounts