HBA-NMO H.B. 86 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 86 By: Gutierrez Ways & Means 2/25/1999 Introduced BACKGROUND AND PURPOSE Current law exempts the sale of certain items, such as certain food and health care supplies, from limited sales, excise, and use taxes. Because this state currently has a budget surplus, this may be an appropriate time to consider certain forms of tax relief. H.B. 86 adds diapers and deletes insulin from a list of health care supplies exempted from limited sales, excise, and use taxes. This bill also exempts from limited sales, excise, and use taxes the sale of clothing, footwear, and fabrics priced less than $50, and school supplies prior to the start of school. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 151.313(a), Tax Code, to add diapers and delete insulin from a list of items exempt from taxes imposed by this chapter (limited sales, excise, and use taxes). SECTION 2. Amends Subchapter H, Chapter 151, Tax Code, by adding Section 151.325, as follows: Sec. 151.325. CERTAIN PRICED CLOTHING OR FOOTWEAR; FABRICS. Exempts the sale of clothing or footwear, priced less than $50, from taxes imposed by this chapter. Provides that this exemption does not apply to an article of clothing or footwear designed and primarily used for athletic activity; nor to accessories, including jewelry, handbags, luggage, umbrella, wallets, watches, and similar items. Exempts from the taxes imposed by this chapter the retail sale of component parts of clothing or footwear, including fabric, thread, knitting yarn, buttons, and zippers, if the sale price is less than $50 and the purchaser is not in the business of fabricating or manufacturing clothing or footwear for sale. SECTION 3. Amends Subchapter H, Chapter 151, Tax Code, by adding Section 151.326, as follows: Sec. 151.326. SCHOOL SUPPLIES PRIOR TO START OF SCHOOL. Exempts from the taxes imposed by this chapter an item that is required for use by a student in an elementary or secondary school classroom which is on a list issued by the student's respective teacher or school, and purchased during August. Provides that the purchaser of the item must give the seller an exemption certificate, unless the seller maintains a separate section that contains only the items that qualify as exempt. SECTION 4. Effective date: the first day of the first calendar quarter beginning on or after the date that is 90 days after adjournment. Makes application of this Act prospective. SECTION 5. Emergency clause.