LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
April 17, 2001
TO: Honorable Rene Oliveira, Chair, House Committee on Ways &
Means
FROM: John Keel, Director, Legislative Budget Board
IN RE: HB3156 by Miller (Relating to the exemption from sales
and use tax of certain items sold during the tax holiday
period in August of each year.), As Introduced
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB3156, As Introduced: a negative impact of $(46,010,000) through *
* the biennium ending August 31, 2003, if the effective date of the *
* bill is July 1, 2001; and a negative impact of $(26,923,000) *
* 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 July 1, 2001.
All Funds, Five-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 *
* 2001 $(6,736,000) $0 $0 $0 *
* 2002 (19,298,000) (3,484,000) (1,344,000) (412,000) *
* 2003 (19,976,000) (3,607,000) (1,392,000) (427,000) *
* 2004 (20,848,000) (3,764,000) (1,452,000) (445,000) *
* 2005 (21,798,000) (3,936,000) (1,519,000) (466,000) *
* 2006 (22,834,000) (4,123,000) (1,591,000) (488,000) *
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The following table assumes an effective date of September 1, 2001.
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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 *
* 2002 $(6,947,000) $0 $0 $0 *
* 2003 (19,976,000) (3,607,000) (1,392,000) (427,000) *
* 2004 (20,848,000) (3,764,000) (1,452,000) (445,000) *
* 2005 (21,798,000) (3,936,000) (1,519,000) (466,000) *
* 2006 (22,834,000) (4,123,000) (1,591,000) (488,000) *
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Fiscal Analysis
The bill would amend Chapter 151 of the Tax Code to extend the existing
limited sales tax exemption for certain items of clothing and footwear
from the current three-day period to five days each August.
The bill would include backpacks and sewing notions in the exemption from
the state sales tax during the tax holiday period if the price per item
fell below $100. Certain school supplies with a price below $25 would be
exempt from taxation during the five-day period. Car safety seats for
children, bicycle helmets, elbow pads, and knee pads also would qualify
for exemption during the holiday period.
A retailer would not have to obtain an exemption certificate except in
instances where the quantity purchased would indicate a non-school usage.
The bill would allow the repeal of the tax holiday exemption for
clothing, footwear, school supplies, backpacks, sewing notions, and
safety equipment during the five-day period by local taxing
jurisdictions, as related to their local sales taxes, as provided by
Chapter 326 of the Tax Code.
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
Estimates on the impact of the current three-day holiday were obtained
from the 2001 Comptroller publication, Tax Exemptions and Tax Incidence
and adjusted to reflect five-day periods.
Data on the sale of school supplies, backpacks, sewing notions, and
safety equipment were obtained from public and private sources, including
the U.S. Census Bureau. The data were adjusted for the appropriate
price range and time period multiplied by the state sales tax rate.
The components were summed, adjusted for the potential effective dates of
July 1, 2001 and September 1, 2001, and extrapolated through fiscal
2006. 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 tables above. This analysis
assumes that all local jurisdictions would offer the exemption.
Source Agencies: 304 Comptroller of Public Accounts
LBB Staff: JK, SD, WP, SM