LEGISLATIVE BUDGET BOARD
                              Austin, Texas
                                     
                    FISCAL NOTE, 77th Regular Session
  
                                May 2, 2001
  
  
          TO:  Honorable Rene Oliveira, Chair, House Committee on Ways &
               Means
  
        FROM:  John Keel, Director, Legislative Budget Board
  
       IN RE:  SB1690  by Ellis, Rodney (Relating to the taxation of
               insurance companies and certain insurance agents.), As
               Engrossed
  
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*  No significant fiscal implication to the State is anticipated.        *
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The bill would amend several articles in the Insurance Code in order to
clarify what taxes an insurance company or organization is subject to in
Texas.  The bill would codify the previously-maintained policies of the
Texas Department of Insurance and the current policy of the Comptroller.
Though there is no significant fiscal impact to the bill, passage of the
bill would mitigate possible legal vulnerabilities for which the
negative revenue impact on other taxes could be highly significant,
potentially on the order of more than $1 billion in refunds and on-going
base losses.

The bill would clarify that insurance companies that pay gross premium
taxes are exempted from other taxes that are based on gross premium
taxes, but not exempt from any other state or local tax imposed by other
laws unless insurance organizations were specifically exempted by those
laws.

Section 1 would amend Article 4.01 to strike language stating that
domestic insurance companies are not required to pay any occupation or
gross receipts taxes except as provided by the Insurance Code.  Sections
2 and 3 would amend  Article 4.06 and  Article 9.59, Section 8,
respectively, to restate that while insurance companies that are subject
to taxation under Insurance Code Chapters 4 and 9 are exempt from any
other state or local gross receipts taxes not levied under the Insurance
Code or the Labor Code, the exemption could not be construed to prohibit
the levy of state or local property taxes or of any other state or local
taxes imposed by other laws unless insurance companies were provided a
specific exemption in those laws.  Section 4 would repeal Article 4.10,
Section 14, and Article 4.11, Section 9, both relating to the limitation
of taxes.

This bill would take effect September 1, 2001.
  
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