LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 76th Regular Session
April 9, 1999
TO: Honorable Rene Oliveira, Chair, House Committee on Ways &
Means
FROM: John Keel, Director, Legislative Budget Board
IN RE: HB2280 by Dutton (relating to a sales tax exemption for
clothing and footwear), Committee Report 1st House,
Substituted
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* Estimated Two-Year Net Impact to General Revenue Related Fundsfor *
* HB2280, Committee Report 1st House, Substituted: negative impact *
* of $(93,394,000) through the biennium ending August 31, 2001, if *
* the effective date is October 1, 1999; and a negative impact of *
* $(158,403,000) through the biennium ending August 31, 2001, if the *
* effective date is July 1, 1999. *
* *
* The bill would make no appropriation but could provide the legal *
* basis for an appropriation of funds to implement the provisions of *
* the bill. *
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The first set of fiscal implications assumes an effective date of October
1, 1999, and that no local authorities would opt out of the annual
clothing and footwear exemption.
All Funds, Six-Year Impact:
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*Fiscal Probable Probable Probable Probable *
* Year Revenue Revenue Revenue Revenue *
* Gain/(Loss) to Gain/(Loss) to Gain/(Loss) to Gain/(Loss) to *
* General Revenue Cities Transit Counties/SPDs *
* Fund Authorities *
* 0001 *
* 2000 $(24,878,000) $0 $0 $0 *
* 2001 (68,516,000) (11,951,000) (4,693,000) (1,447,000) *
* 2002 (71,381,000) (12,450,000) (4,889,000) (1,508,000) *
* 2003 (74,421,000) (12,981,000) (5,097,000) (1,572,000) *
* 2004 (77,498,000) (13,517,000) (5,308,000) (1,637,000) *
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The following fiscal implications assume an effective date of July 1,
1999 and that no local authorities would opt out of the annual clothing
and footwear exemption.
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*Fiscal Probable Probable Probable Probable *
* Year Revenue Revenue Revenue Revenue *
* Gain/(Loss) to Gain/(Loss) to Gain/(Loss) to Gain/(Loss) to *
* General Revenue Cities Transit Counties/SPDs *
* Fund Authorities *
* 0001 *
* 1999 $(24,072,000) $0 $0 $0 *
* 2000 (65,815,000) (11,479,000) (4,508,000) (1,390,000) *
* 2001 (68,516,000) (11,951,000) (4,693,000) (1,447,000) *
* 2002 (71,381,000) (12,450,000) (4,889,000) (1,508,000) *
* 2003 (74,421,000) (12,981,000) (5,097,000) (1,572,000) *
* 2004 (77,498,000) (13,517,000) (5,308,000) (1,637,000) *
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Fiscal Analysis
The bill would amend the Tax Code to exempt articles of clothing and
footwear costing less than $75 per article from sales tax if purchased
during a specified nine-day period each August. The exemption would not
apply to clothing and footwear primarily designed for athletic activity
or protective use (and that would not normally be worn except for use in
those activities), accessories (e.g., handbags, jewelry, and wallets), or
the rental of clothing or footwear.
Services performed on items exempt from sales tax under the provisions of
this bill would not be eligible for tax-exempt purchase.
The bill would allow, on or after January 1, 2000, the repeal of this
exemption by local taxing jurisdictions as it would relate to their
local sales taxes. The manner of repeal would be addressed in the new
Chapter 326 of the Tax Code, which would be added by this bill.
Methodology
Data on the sale of clothing and footwear were gathered from the U.S.
Census Bureau. Clothing and footwear sales data were adjusted for the
appropriate price range and time period, multiplied by the state sales
tax rate, and extrapolated through fiscal 2004. If the bill received a
two-thirds vote in each house, this bill would take effect July 1, 1999.
Otherwise, it would take effect October 1, 1999. The fiscal impacts on
units of local government were estimated proportionally.
Local Government Impact
Local units of government would have a corresponding fiscal impact from
sales tax revenues, as indicated in the table above.
Source Agencies: 304 Comptroller of Public Accounts
LBB Staff: JK, BB, BR, SM