78R5214 CBH-F

By:  Nelson                                                       S.B. No. 793



A BILL TO BE ENTITLED

AN ACT

relating to the application of the sales and use tax to 
biotechnology cleanrooms and equipment.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Section 151.318, Tax Code, is amended by 
amending Subsections (b) and (s) and adding Subsection (q-1) to 
read as follows:
	(b)  The exemption includes:                                                   
		(1)  chemicals, catalysts, and other materials that are 
used during a manufacturing, processing, or fabrication operation 
to produce or induce a chemical or physical change, to remove 
impurities, or to make the product more marketable; [and]
		(2)  semiconductor fabrication cleanrooms and 
equipment; and         
		(3)  biotechnology cleanrooms and equipment, including 
pharmaceutical cleanrooms and equipment.
	(q-1)  For purposes of Subsection (b), "biotechnology 
cleanrooms and equipment" means all tangible personal property, 
without regard to whether the property is affixed to or 
incorporated into realty, used in connection with the 
manufacturing, processing, or fabrication in a cleanroom 
environment of a biotechnology product, without regard to whether 
the property is actually contained in the cleanroom environment.  
The term includes integrated systems, fixtures, and piping, all 
property necessary or adapted to reduce contamination or to control 
airflow, temperature, humidity, chemical purity, or other 
environmental conditions or manufacturing tolerances, and 
production equipment and machinery.  The term does not include the 
building or a permanent, nonremovable component of the building 
that houses the cleanroom environment.  The term includes moveable 
cleanroom partitions and cleanroom lighting. "Biotechnology 
cleanrooms and equipment" are not "intraplant transportation 
equipment" as that term is used in Subsection (c)(1).
	(s)  The following do not apply to the semiconductor 
fabrication cleanrooms and equipment in Subsection (q) or the 
biotechnology cleanrooms and equipment in Subsection (q-1):
		(1)  limitations in Subsection (a)(2) that refer to 
tangible personal property directly causing chemical and physical 
changes to the product being manufactured, processed, or fabricated 
for ultimate sale;
		(2)  Subsection (c)(1);  and                                                  
		(3)  Subsection (c)(4).                                                       
	SECTION 2.  Section 313.021(2), Tax Code, is amended to read 
as follows:     
		(2)  "Qualified property" means:                                              
			(A)  land:                                                                   
				(i)  that is located in an area designated as 
a reinvestment zone under Chapter 311 or 312 or as an enterprise 
zone under Chapter 2303, Government Code;
				(ii)  on which a person proposes to 
construct a new building or erect or affix a new improvement that 
does not exist before the date the owner applies for a limitation on 
appraised value under this subchapter;
				(iii)  that is not subject to a tax abatement 
agreement entered into by a school district under Chapter 312;  and
				(iv)  on which, in connection with the new 
building or new improvement described by Subparagraph (ii), the 
owner of the land proposes to:
					(a)  make a qualified investment in an 
amount equal to at least the minimum amount required by Section 
313.023;  and
					(b)  create at least 25 new jobs;                                          
			(B)  the new building or other new improvement 
described by Paragraph (A)(ii); and
			(C)  tangible personal property that:                                        
				(i)  is not subject to a tax abatement 
agreement entered into by a school district under Chapter 312;  and
				(ii)  except for new equipment described in 
Section 151.318(q) or (q-1), is first placed in service in the new 
building or in or on the new improvement described by Paragraph 
(A)(ii), or on the land on which that new building or new 
improvement is located, if the personal property is ancillary and 
necessary to the business conducted in that new building or in or on 
that new improvement.
	SECTION 3.  (a) This Act takes effect July 1, 2003, if it 
receives a vote of two-thirds of all the members elected to each 
house, as provided by Section 39, Article III, Texas Constitution.  
If this Act does not receive the vote necessary for effect on that 
date, this Act takes effect September 1, 2003.
	(b)  The change in law made by this Act does not affect taxes 
imposed before the effective date of this Act, and the former law is 
continued in effect for purposes of the liability for and 
collection of those taxes.