BILL ANALYSIS


                                                     C.S.S.B. 833
                                                        By: Madla
                                                          Finance
                                                         04-28-95
                                   Committee Report (Substituted)
BACKGROUND

In 1975, the Texas Legislature exempted from general sales tax the
"training or instructing [of] pilots in a licensed course of
instruction" that included any Federal Aviation Administration
recognizable flight training.  However, in 1977, the comptroller
promulgated an "interpreting" regulation that, when applied, barred
most legitimate pilot trainers in Texas from  claiming that
exemption.  Moreover, many flight trainers did not receive word of
this regulatory change until the late 1980s and early 1990s, and
then only during comptroller audits.

PURPOSE

As proposed, C.S.S.B. 833 rephrases the controlling statutory law
to make it unquestionably clear that all Federal Aviation
Administration-recognizable flight training will have the sale tax
exemption it was granted previously. 

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 Sections 151.328(a), (b), (d), and (e), Tax Code,
as follows:

     (a)  Provides that aircraft are exempted from the taxes
     imposed by Chapter 151 if sold to a person who has a sales tax
     permit issued under Chapter 151 and uses the aircraft for the
     purpose of training or instructing pilots in flight
     instruction recognized by the Federal Aviation Administration
     (FAA) and that is designed to lead to a pilot certificate or
     rating issued by the FAA.
     
     (b)  Provides that repair, remodeling, and maintenance
     services to aircraft, including an engine or other component
     part of aircraft, operated by a person described by Subsection
     (a)(1) or (a)(2) are exempted from the taxes imposed by
     Chapter 151.
     
     (d)  Adds supplies to the items that are exempt.  Makes
     conforming changes.
     
     (e)  Provides that tangible personal property that is
     permanently affixed or attached as a component part of an
     aircraft owned or operated by a person described by 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, is exempted from the taxes imposed by
     Chapter 151.
     
     SECTION 2.     (a)  Effective date: 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.

     (b)  Makes application of this Act prospective.
SECTION 3. Emergency clause.