HBA-NLM, LCA H.B. 175 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 175 By: Chavez Ways & Means 4/13/1999 Introduced BACKGROUND AND PURPOSE Chapter 151, Tax Code (Limited Sales, Excise, and Use Tax), was amended in 1997 by the 75th Legislature to require that exempt items under Section 151.318 (Property Used in Manufacturing) make a physical or chemical change to a final product. This modification was intended to apply to manufactured items, but has produced uncertainty in the film industry, often leading filmmakers to other states to make their films. To promote the continued development of the film and video industry in Texas, H.B. 175 amends the Tax Code to specify that film production is considered manufacturing, and includes specific machinery and motor vehicles and equipment used in production under the exemption. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that this bill does not expressly delegate any additional rulemaking authority to a state officer, department, agency, or institution. SECTION BY SECTION ANALYSIS SECTION 1. Amends Chapter 151, Section 151.318, Tax Code, as follows: Sec. 151.318. PROPERTY USED IN MANUFACTURING. (b) Adds a sales tax exemption for the production for consideration of a motion picture or video or audio recording, a copy of which is sold or offered for sale, licensed, distributed, broadcast, or otherwise exhibited, considering these activities to be "manufacturing" for the purposes of this section. Requires that an exemption applies towards machinery and motor vehicles and equipment rented or purchased for the production. Makes nonsubstantive changes. (c) Creates Subdivision (3) from existing Subdivision (4). Deletes former Subdivision (c)(3) to eliminate "hand tools" as equipment that is not exempted. (Does not indicate a redesignation for Subdivision (5)). Makes a conforming change. (p) Redesignated from existing Subsection (q). Deletes existing Subsection (p) which contained the language added by that Act in Subsection (b)(3). SECTION 2. Effective date: September 1, 1998. SECTION 3. Emergency clause. Effective date: upon passage.