By Dutton                                              H.B. No. 860
         77R2127 DAK-D                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to exemptions from the sales tax.
 1-3           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-4           SECTION 1.  Section 151.326(a), Tax Code, is amended to read
 1-5     as follows:
 1-6           (a)  The sale of an article of clothing or footwear designed
 1-7     to be worn on or about the human body is exempted from the taxes
 1-8     imposed by this chapter if:
 1-9                 (1)  the sales price of the article is less than $100;
1-10     and
1-11                 (2)  the sale takes place during a period beginning at
1-12     12:01 a.m. on the first Saturday in August and ending at 11:59 p.m.
1-13     on the second Friday after the first Saturday in August [Friday in
1-14     August and ending at 12 midnight on the following Sunday].
1-15           SECTION 2.  Subchapter H, Chapter 151, Tax Code, is amended
1-16     by adding Section 151.327 to read as follows:
1-17           Sec. 151.327.  SCHOOL SUPPLIES, TEXTBOOKS, BOOKS, AND OTHER
1-18     INSTRUCTIONAL MATERIALS BEFORE START OF SCHOOL.  (a)  The sale or
1-19     storage, use, or other consumption of a school supply is exempted
1-20     from the taxes imposed by this chapter if the school supply is
1-21     purchased:
1-22                 (1)  for use by a student in a class in a public or
1-23     private elementary or secondary school, including textbooks, books,
1-24     and other instructional materials;
 2-1                 (2)  during August; and
 2-2                 (3)  for a sales price of less than $100 per item.
 2-3           (b)  For purposes of this exemption, "school supply" means:
 2-4                 (1)  crayons;
 2-5                 (2)  scissors;
 2-6                 (3)  glue, paste, and glue sticks;
 2-7                 (4)  pencils;
 2-8                 (5)  pens;
 2-9                 (6)  erasers;
2-10                 (7)  rulers;
2-11                 (8)  markers;
2-12                 (9)  highlighters;
2-13                 (10)  paper, including loose-leaf ruled notebook paper,
2-14     copy paper, graph paper, tracing paper, manila paper, colored
2-15     paper, poster board, and construction paper;
2-16                 (11)  writing tablets;
2-17                 (12)  spiral notebooks;
2-18                 (13)  bound composition notebooks;
2-19                 (14)  pocket folders;
2-20                 (15)  plastic folders;
2-21                 (16)  expandable portfolios;
2-22                 (17)  manila folders;
2-23                 (18)  three-ring binders that are three inches or less
2-24     in capacity;
2-25                 (19)  backpacks and zipper pencil bags;
2-26                 (20)  school supply boxes;
2-27                 (21)  clipboards;
 3-1                 (22)  index cards;
 3-2                 (23)  index card boxes;
 3-3                 (24)  calculators;
 3-4                 (25)  protractors;
 3-5                 (26)  compasses;
 3-6                 (27)  music notebooks;
 3-7                 (28)  sketch or drawing pads;
 3-8                 (29)  paintbrushes;
 3-9                 (30)  watercolors;
3-10                 (31)  acrylic, tempera, or oil paints;
3-11                 (32)  tape, including masking tape and Scotch tape;
3-12                 (33)  clay and glazes;
3-13                 (34)  pencil sharpeners;
3-14                 (35)  thesauruses; and
3-15                 (36)  dictionaries.
3-16           (c)  A retailer is not required to obtain an exemption
3-17     certificate stating that the school supplies are purchased for use
3-18     by a student in a class in a public or private elementary or
3-19     secondary school unless the supplies are purchased in a quantity
3-20     that indicates that the supplies are not purchased for use by a
3-21     student in a class in a public or private elementary or secondary
3-22     school.
3-23           (d)  The governing body of a local taxing authority may
3-24     repeal the exemption under this section in the manner provided by
3-25     Chapter 326.
3-26           SECTION 3.  (a) This Act takes effect July 1, 2001, if it
3-27     receives a vote of two-thirds of all the members elected to each
 4-1     house, as provided by Section 39, Article III, Texas Constitution.
 4-2     If this Act does not receive the vote necessary for effect on that
 4-3     date, this Act takes effect October 1, 2001.
 4-4           (b)  The change in law made by this Act does not affect taxes
 4-5     imposed before the effective date of this Act, and the law in
 4-6     effect before the effective date of this Act is continued in effect
 4-7     for purposes of the liability for and collection of those taxes.