LEGISLATIVE BUDGET BOARD
                              Austin, Texas
                                     
                    FISCAL NOTE, 77th Regular Session
  
                              April 23, 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.), Committee Report 1st House, as amended
  
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*  Estimated Two-year Net Impact to General Revenue Related Funds for    *
*  SB1678, Committee Report 1st House, as amended: 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:
  
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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         $(10,000)              $0              $0              $0 *
*  2002         (127,000)        (23,000)         (9,000)         (3,000) *
*  2003         (131,000)        (24,000)         (9,000)         (3,000) *
*  2004          (11,000)         (4,000)         (2,000)         (1,000) *
*  2005                 0               0               0               0 *
*  2006                 0               0               0               0 *
***************************************************************************
  
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          (11,000)         (4,000)         (2,000)         (1,000) *
*  2005                 0               0               0               0 *
*  2006                 0               0               0               0 *
***************************************************************************
  
Fiscal Analysis
  
The bill would add Section 151.3511 to the Tax Code to exempt the sale of
an information service from the state sales and use tax if the service
delivered its information by fax or electronic mail over the Internet,
did not contain any advertisements, was issued not more than once each
business day, cost less than $500 for a yearly subscription, and did not
have more than 750 subscribers.

The newly-created Section 151.3511 would expire August 31, 2003.  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 the projection period.  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.
 
Note:  The fiscal implications in 2004 reflect state sales taxes
collected during August 2003; local impacts reflect taxes collected in
July and August, 2003.
  
  
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