TO: | Honorable Ron Wilson, Chair, House Committee on Ways & Means |
FROM: | John Keel, Director, Legislative Budget Board |
IN RE: | HB976 by Grusendorf (Relating to exempting certain purchases of machinery and equipment used for research or development from sales and use taxes.), As Introduced |
Fiscal Year | Probable Net Positive/(Negative) Impact to General Revenue Related Funds |
---|---|
2004 | $0 |
2005 | $0 |
2006 | ($9,808,000) |
2007 | ($17,163,000) |
2008 | ($28,834,000) |
Fiscal Year | Probable Revenue Gain/(Loss) fromGENERAL REVENUE FUND 1 |
Probable Revenue Gain/(Loss) fromCities | Probable Revenue Gain/(Loss) fromTransit Authorities | Probable Revenue Gain/(Loss) fromCounties/Special Districts |
---|---|---|---|---|
2004 | $0 | $0 | $0 | $0 |
2005 | $0 | $0 | $0 | $0 |
2006 | ($9,808,000) | ($1,805,000) | ($650,000) | ($225,000) |
2007 | ($17,163,000) | ($3,158,000) | ($1,138,000) | ($395,000) |
2008 | ($28,834,000) | ($5,306,000) | ($1,912,000) | ($663,000) |
The bill would amend Chapter 151 of the Tax Code to exempt machinery, equipment, and replacement parts that are used directly in the research or development of inventions, products, processes, or technology.
To qualify for exemption, the item would have to be used by a person primarily engaged either in the manufacturing, processing, or fabrication of tangible personal property for ultimate sale, or in the performance of scientific or technical services for such a person. The exemption would not apply to office equipment or supplies or to equipment or supplies used in sales, distribution, or transportation activities.
A person would be entitled to a credit or refund of a portion of taxes paid on the machinery or equipment. For purchases made in calendar 2006, a person would be entitled to a refund or credit of 20 percent of the taxes paid. The refund or credit would increase to 40 percent in 2007, 60 percent in 2008, and 80 percent in 2009. The machinery and equipment would become fully exempt January 1, 2010.
Credits would have to be claimed no later than the first anniversary of the date of purchase. Refund requests would have to be filed with the Comptroller before or during the calendar year following the year in which the tax was paid.
The bill would take effect January 1, 2006.
Source Agencies: | 304 Comptroller of Public Accounts
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LBB Staff: | JK, JO, SD, WP, SM
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