LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session March 27, 2001 TO: Honorable Rodney Ellis, Chair, Senate Committee on Finance FROM: John Keel, Director, Legislative Budget Board IN RE: SB1678 by Jackson (Relating to exempting certain electronic information services from the sales and use tax.), As Introduced ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * SB1678, As Introduced: a negative impact of $(268,000) through the * * biennium ending August 31, 2003, if the effective date of the bill * * is July 1, 2001; and a negative impact of $(237,000) through the * * biennium ending August 31, 2003, if the effective date of the bill * * is October 1, 2001. * ************************************************************************** The following table assumes an effective date of July 1, 2001. All Funds, Five-Year Impact: *************************************************************************** *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 $(10,000) $0 $0 $0 * * 2002 (127,000) (23,000) (9,000) (3,000) * * 2003 (131,000) (24,000) (9,000) (3,000) * * 2004 (136,000) (24,000) (9,000) (3,000) * * 2005 (140,000) (25,000) (10,000) (3,000) * * 2006 (146,000) (26,000) (10,000) (3,000) * *************************************************************************** The following table assumes an effective date of October 1, 2001. *************************************************************************** *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 $(106,000) $(17,000) $(7,000) $(2,000) * * 2003 (131,000) (24,000) (9,000) (3,000) * * 2004 (136,000) (24,000) (9,000) (3,000) * * 2005 (140,000) (25,000) (10,000) (3,000) * * 2006 (146,000) (26,000) (10,000) (3,000) * *************************************************************************** Fiscal Analysis The bill would amend Chapter 151 of the Tax Code to exempt the sale of an information service from the state sales and use tax if the service delivers its information by fax or electronic mail over the Internet, does not contain any advertisements, is issued not more than once each business day, costs less than $500 for a yearly subscription, and does not have more than 750 subscribers. The bill would take effect July 1, 2001, assuming that it received the requisite two-thirds majority votes in both houses of the Legislature. Otherwise, it would take effect October 1, 2001. Methodology Data on the sale of information services were gathered from public and private sources, including Comptroller tax files. Sales were adjusted for the specified information services, multiplied by the state sales tax rate, adjusted for potential effective dates of June 1, 2001 and October 1, 2001, and extrapolated through 2006. The fiscal impact on units of local government were estimated proportionally. Note: Currently, 20 percent of the value of information services is exempted from the state sales and use tax under Section 151.351 of the Tax Code. Local Government Impact Local units of government would have a corresponding fiscal impact from sales tax revenues, as indicated in the table above. Source Agencies: 304 Comptroller of Public Accounts LBB Staff: JK, SD, SM