LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session April 23, 2001 TO: Honorable Rene Oliveira, Chair, House Committee on Ways & Means FROM: John Keel, Director, Legislative Budget Board IN RE: HB2901 by Burnam (Relating to the imposition of a tax on the purchase of coal in this state; providing penalties.), As Introduced ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * HB2901, As Introduced: a positive impact of $240,346,000 through * * the biennium ending August 31, 2003, if the effective date of the * * bill is June 1, 2001, or a positive impact of $213,321,000 for the * * biennium ending August 31, 2003, if the effective date of the bill * * is September 1, 2001. * ************************************************************************** The following table assumes a June 1 , 2001 effective date for the bill. All Funds, Five-Year Impact: ***************************************************** * Fiscal Year Probable Revenue Gain/(Loss) to * * General Revenue Fund * * 0001 * * 2001 $18,013,000 * * 2002 110,278,000 * * 2003 112,055,000 * * 2004 110,331,000 * * 2005 109,995,000 * * 2006 110,202,000 * ***************************************************** The following table assumes a September 1, 2001 effective date for the bill. ***************************************************** * Fiscal Year Probable Revenue Gain/(Loss) to * * General Revenue Fund * * 0001 * * 2002 $101,171,000 * * 2003 112,150,000 * * 2004 110,806,000 * * 2005 110,545,000 * * 2006 110,669,000 * ***************************************************** Fiscal Analysis The bill amends the Tax Code to create a tax on coal and lignite either purchased or used in Texas. A person would be able to deduct any taxes reported and paid on coal or lignite purchased in this state from any tax due on coal or lignite used in this state. The bill imposes a tax rate of 7.5 percent of the price paid for the coal, including transportation costs. Tax due, and a report of coal purchased and used in this state, would be filed with the Comptroller's Office on or before the 25th day of the month following the month in which the tax is incurred. The bill requires persons to maintain a complete record of the amount of coal purchased for use in this state, the total price of the coal, plus any other information that the Comptroller would need. A delinquent tax payment would be subject to interest as provided by Section 111.060. A person not filing a report as required, or paying the tax when due, would be subject to a penalty of 12 percent of the amount of the delinquent tax. If the report were not paid within 30 days after its due date, an additional 12 percent penalty would be imposed. The minimum penalty would be $1.00. A person who violated the provisions of this bill would commit a Class C misdemeanor. Revenue from the new coal tax would be credited to the General Revenue Fund 0001. This 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 takes effect September 1, 2001. Methodology This estimate is based on analyses done by the Comptroller's Office. The Comptroller's Office used the Public Utility Commission's coal and lignite forecast of price and production to estimate revenue collections. For the immediate enactment date, the Comptroller's Office assumed the effective date would be June 1, 2001 and the first month with tax receipts would be July 2001, and for the September 1, 2001 effective date, the first month with tax receipts would be October 2001. Once the static fiscal impact was estimated by the Comptroller's Office, the dynamic fiscal impact was calculated using a Texas-specific general equilibrium model to distribute the amount that otherwise would have been saved or spent on other items by businesses and consumers among the state's economic sectors. The revenue feedback calculation was based on the historical relationship between state tax revenues and associated economic factors. The first revenue table assumes the June 1, 2001 effective date; the second table, the September 1, 2001 effective date. Local Government Impact No fiscal implication to units of local government is anticipated. Source Agencies: 304 Comptroller of Public Accounts LBB Staff: JK, SD, WP, CT