C.S.S.B. 1705 78(R)    BILL ANALYSIS


C.S.S.B. 1705
By: Wentworth
Local Government Ways and Means
Committee Report (Substituted)



BACKGROUND AND PURPOSE 

Current law prohibits a metropolitan transit authority (MTA) from
collecting a sales tax that includes telecommunications services unless it
is approved by the majority of the members of the governing body of each
municipality within the MTA service area.  C.S.S.B. 1705 restructures the
approval process for MTA repeal of the local sales and use tax exemption
for telecommunications services.  

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any
additional rulemaking authority to a state officer, department, agency, or
institution. 

ANALYSIS

SECTION 1.  Amends Section 322.109, Tax Code, by amending Subsection (d)
and adding Subsections (f)-(h):   

(d) Prohibits the governing board of a taxing entity created under Chapter
451, Transportation Code, from repealing the application of the exemption
provided by Subsection (a) unless the repeal is first approved by a
majority of the members of the governing body of each municipality that
created the taxing entity, except as authorized by Subsection (f).  
 
(f) Prohibits the governing board of a taxing entity created before 1980
in which the principal municipality has a population of less than 1.2
million from repealing the application of the exemption provided by
Subsection (a) unless the repeal is first approved by a majority vote of a
committee created under Section 451.061(d), Transportation Code.  Requires
a restatement of the exemption to be approved in the same manner.  

(g) The imposition or collection of revenue resulting from a repeal of the
exemption provided by Subsection (a) under the procedure provided in
Subsection (e) is tolled when the governing board obtains receipts from
sales and use tax collected by an Advance Transportation District in
excess of the amount of revenue generated by the repeal of the exemption
as stated above. 

(h) If the exemption provided by Subsection (a) is repealed, a
telecommunications services provider may retain one percent of all sales
and use taxes imposed as a result of the repeal. 

SECTION 2.  Effective date:  upon passage or September 1, 2003.

EFFECTIVE DATE

Upon passage or September 1, 2003.

COMPARISON OF ORIGINAL TO SUBSTITUTE

SECTION 1.  Differs from the original proposed Section 322.109 by
replacing existing text of Subsection (f) of the Tax Code and adding an
exception authorized by Subsection (g).  

Differs from the original proposed Section 322.109 by proposing a new
Subsection (f) of the Tax Code to allow the governing board of a taxing
authority created before 1980 where the principal  municipality has a
population of less than 1.2 million to repealed the application of the
exemption provided in Subsection (a) if its repeal is first approved by a
majority vote of the committee created under Section 451.061(d),
Transportation Code. 

Differs from the original proposed Section 322.109 by proposing a new
Subsection (g) of the Tax Code that will toll the collection of the
telecommunications services tax if the governing board receives sales tax
receipts from an Advance Transportation District that are greater than
those collected by the telecommunications services tax.    

Differs from the original proposed Section 322.109 by proposing a new
Subsection (h) of the Tax Code that, if the telecommunications services
tax exemption is repealed, will allow a telecommunications services
provider to retain one percent of taxes collected to cover administrative
costs of collecting the tax.