By Greenberg                                    H.B. No. 1753

      75R5168 DAK-D                           

                                A BILL TO BE ENTITLED

 1-1                                   AN ACT

 1-2     relating to exempting certain purchases of machinery and equipment

 1-3     used for research and development from sales and use taxes.

 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

 1-5           SECTION 1.  Subchapter H, Chapter 151, Tax Code, is amended

 1-6     by adding Section 151.3181 to read as follows:

 1-7           Sec. 151.3181.  EQUIPMENT USED IN RESEARCH OR DEVELOPMENT.

 1-8     (a)  There are exempted from the taxes imposed by this chapter

 1-9     machinery, equipment, or replacement parts that are used directly

1-10     in the research or development of inventions, products, processes,

1-11     or technology by a person that is primarily engaged in:

1-12                 (1)  the manufacturing, processing, or fabrication of

1-13     tangible personal property for ultimate sale; or

1-14                 (2)  the performance of scientific or technical

1-15     services for a person described by Subdivision (1).

1-16           (b)  The exemption does not include:

1-17                 (1)  office equipment or supplies; or

1-18                 (2)  equipment or supplies used in sales or

1-19     distribution activities or in transportation activities.

1-20           (c)  In this section, "manufacturing" has the meaning

1-21     assigned by Section 151.318.

1-22           SECTION 2.  (a)  This Act takes effect October 1, 1997.

1-23           (b)  The change in law made by this Act does not affect taxes

1-24     imposed before the effective date of this Act, and the law in

 2-1     effect before the effective date of this Act is continued in effect

 2-2     for purposes of the liability for and collection of those taxes.

 2-3           SECTION 3.  The importance of this legislation and the

 2-4     crowded condition of the calendars in both houses create an

 2-5     emergency and an imperative public necessity that the

 2-6     constitutional rule requiring bills to be read on three several

 2-7     days in each house be suspended, and this rule is hereby suspended.