LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session March 26, 2001 TO: Honorable Rodney Ellis, Chair, Senate Committee on Finance 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 Introduced ************************************************************************** * No significant fiscal implication to the State is anticipated. * ************************************************************************** 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