LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session April 18, 2001 TO: Honorable Rene Oliveira, Chair, House Committee on Ways & Means FROM: John Keel, Director, Legislative Budget Board IN RE: HB3394 by Oliveira (Relating to the refund of sales and use tax paid on tangible personal property that is exported beyond the territorial limits of the United States.), As Introduced ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * HB3394, As Introduced: negative impact of $(3,814,038) through * * the biennium ending August 31, 2003. * ************************************************************************** General Revenue-Related Funds, Five-Year Impact: **************************************************** * Fiscal Year Probable Net Positive/(Negative) * * Impact to General Revenue Related * * Funds * * 2002 $(2,145,969) * * 2003 (1,668,069) * * 2004 (1,668,069) * * 2005 (1,668,069) * * 2006 (1,668,069) * **************************************************** All Funds, Five-Year Impact: *************************************************************************** *Fiscal Probable Savings/(Cost) from Change in Number of State * * Year General Revenue Fund Employees from FY 2001 * * 0001 * * 2002 $(2,145,969) 53.0 * * 2003 (1,668,069) 53.0 * * 2004 (1,668,069) 53.0 * * 2005 (1,668,069) 53.0 * * 2006 (1,668,069) 53.0 * *************************************************************************** Fiscal Analysis The bill would amend Chapter 151 of the Tax Code, relating to the refund of sales and use tax paid on certain property exported out of the country. The bill would require the Comptroller to charge an amount, prescribed by rule, for each transaction to verify that tangible personal property was exported beyond the territorial limits of the United States. The bill would eliminate custom broker verification, with the use of Comptroller export stamps, as documentation for the export of tangible personal property. Documentation provided by an export verification center could be shown as proof of export when an exemption from state sales and use tax for tangible personal property was claimed because property was exported beyond the territorial limits of the United States. An "export verification center" would be defined as a location operated by the Comptroller's Office used for verifying that tangible personal property was exported beyond the territorial limits of the United States. Section 151.157 of the Tax Code, relating to the state regulation of customs brokers, would be repealed. The bill would take effect January 1, 2002. Methodology Export verification centers operated by the Comptroller's Office would replace customs brokers with respect to the verification of exports for the purpose of sales tax refunds relating to tangible personal property exported beyond the territorial limits of the United States. The proposed system of verification could limit the number of non-legitimate refunds. It is assumed that an insignificant portion of these sales for export would be affected. Note: It is estimated that approximately $60 million in state and local sales and use taxes is refunded annually to consumers for tangible personal property legitimately exported from Texas to Mexico. This cost estimate assumes the Comptroller would operate 10 verification centers statewide. The centers will be located in Laredo, Hidalgo, Brownsville, El Paso, Del Rio, Eagle Pass, San Antonio, Dallas, Houston, and Austin. The Comptroller's Office would require a minimum of 53 FTE s to operate the export verification centers. The increased workload assumes 2.2 million exports would be verified under the provisions of the bill. In fiscal year 2000, approximately 2.2 million stamps were issued to custom brokers for verification purposes. Local Government Impact No significant fiscal implication to units of local government is anticipated. Source Agencies: 304 Comptroller of Public Accounts LBB Staff: JK, SD, WP, SM