LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
April 24, 2001
TO: Honorable Rene Oliveira, Chair, House Committee on Ways &
Means
FROM: John Keel, Director, Legislative Budget Board
IN RE: HB2866 by Sadler (Relating to exempting boats and motors
purchased exclusively for rental from the sales and use
tax on boats and motors.), As Introduced
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB2866, As Introduced: a negative impact of $(1,569,000) through *
* the biennium ending August 31, 2003, if the effective date of the *
* bill is June 1, 2001; and a negative impact of $(1,337,000) *
* through the biennium ending August 31, 2003, if the effective date *
* of the bill is September 1, 2001. *
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The following table assumes an effective date of June 1, 2001.
All Funds, Five-Year Impact:
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* Fiscal Year Probable Revenue Gain/(Loss) from *
* General Revenue Fund *
* 0001 *
* 2001 $(169,000) *
* 2002 (692,000) *
* 2003 (708,000) *
* 2004 (727,000) *
* 2005 (747,000) *
* 2006 (769,000) *
*****************************************************
The following table assumes an effective date of September 1, 2001.
*****************************************************
* Fiscal Year Probable Revenue Gain/(Loss) from *
* General Revenue Fund *
* 0001 *
* 2002 $(629,000) *
* 2003 (708,000) *
* 2004 (727,000) *
* 2005 (747,000) *
* 2006 (769,000) *
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Fiscal Analysis
The bill would amend Chapter 160 of the Tax Code to exempt from the boat
and boat motor sales and use tax the purchase of a boat or boat motor by
a purchaser who would use the boat or boat motor exclusively for rental
to others.
The bill would take effect immediately upon enactment, assuming that it
received the requisite two-thirds majority votes in both houses of the
Legislature. Otherwise, it would take effect September 1, 2001.
Methodology
Currently, boats and boat motors purchased for rental are subject to the
boat and motor sales and use tax, while rentals are taxed under the
limited sales and use tax. This bill would allow purchasers of boat and
boat motors for rental to make their purchases tax free and continue to
report taxable rentals under the limited sales and use tax.
Data were obtained from the U.S. Census Bureau on the number of
establishments in Texas renting boats and motors. It is estimated that
approximately $568,000 in boat and boat motor sales and use tax was paid
during calendar 1997 for the purchase of boats and motors qualifying for
exemption under the provisions of the bill. The estimated fiscal impact
was projected through 2006 and adjusted for effective date.
Local Government Impact
Local units of government would have a corresponding fiscal impact from
sales tax revenues, as indicated in the tables above.
Source Agencies: 304 Comptroller of Public Accounts
LBB Staff: JK, SD, SM