| TO: | Honorable Jim Keffer, Chair, House Committee on Ways & Means |
| FROM: | John S. O'Brien, Deputy Director, Legislative Budget Board |
| IN RE: | HB4 by Swinford (Relating to motor vehicle sales and use taxes.), As Introduced |
| Fiscal Year | Probable Net Positive/(Negative) Impact to General Revenue Related Funds |
|---|---|
| 2006 | $43,619,000 |
| 2007 | $60,614,000 |
| 2008 | $61,705,000 |
| 2009 | $62,416,000 |
| 2010 | $63,111,000 |
| Fiscal Year | Probable Revenue Gain/(Loss) from GENERAL REVENUE FUND 1 |
|---|---|
| 2006 | $43,619,000 |
| 2007 | $60,614,000 |
| 2008 | $61,705,000 |
| 2009 | $62,416,000 |
| 2010 | $63,111,000 |
The bill would amend Chapter 152 of the Tax Code to establish a presumptive value for determining the proper amount of motor vehicle sales tax due on certain motor vehicle sales transactions.
The bill would establish a presumptive value for all motor vehicles as the average retail value of a motor vehicle for motor vehicle sales tax computation purposes. The Texas Department of Transportation (TxDOT) would determine the presumptive value of a motor vehicle based on a nationally recognized motor vehicle industry reporting service.
If the amount paid for a motor vehicle in a sales transaction were greater than or equal to the presumptive value, a tax assessor-collector would compute and collect the motor vehicle sales tax due on the amount paid. If, however, the amount paid for a motor vehicle in a sales transaction were less than the presumptive value, the tax assessor-collector would compute and collect the motor vehicle sales tax due on the presumptive value, unless the purchaser could establish a retail value.
The bill would allow a purchaser to establish a retail value by obtaining an appraisal, certified by an adjuster licensed under Chapter 4101 of the Insurance Code, or by a motor vehicle dealer operating under Subchapter B, Chapter 503 of the Transportation Code.
Appraisals would have to be on a form prescribed by the Comptroller, and they would have to be obtained no later than the 20th day after purchase. Dealers could charge a fee, set by the Comptroller, for providing the certified appraisal; and the tax assessor-collector would retain a copy of each certified appraisal for a period prescribed by the Comptroller.
TxDOT would maintain information on the standard presumptive values of motor vehicles as part of its registration and title system; TxDOT would update the information each calendar quarter.
The part of the bill that would require TxDOT to establish standard presumptive values for motor vehicles, modify its registration and title system, and make the information available to county tax assessor-collectors would take effect July 1, 2006, if the bill received a vote of two-thirds of the members elected to each house.
If the bill did not receive the necessary votes for a July 1, 2006 effective date, it would take effect on the 91st day after the last day of the legislative session.
The part of the bill imposing standard presumptive value and its use by tax assessor-collectors to compute the motor vehicle sales tax due would take effect October 1, 2006.
TxDOT estimates that initial implementation of the bill will cost them approximately $800,000 in computer programming and public information expenses. Once implemented, continued operating expenses to TxDOT would be incidental.
This estimate is based upon information provided by the Comptroller's Office and TxDOT.
The bill would apply primarily to sales of motor vehicles between individuals, often referred to as "casual" or "private" sales. The estimate assumes an average value of a used vehicle in Texas to be approximately $7,300. According to TxDOT, there were approximately 3.3 million used vehicle title transactions in calendar 2004, of which about 1.2 million would have been subject to the presumptive value adjustment. The estimated revenues for fiscal year 2007 were adjusted to allow for implementation lags. The fiscal year 2007 estimate was further reduced by 25 percent to account for potential undervaluations in certified appraisals
No significant fiscal implication to units of local government is anticipated.
The increase in motor vehicle sales tax revenue would generate additional commission revenue for the sum of all Texas counties. Beginning in 2007, additional county commissions would be about $2 million and increase to about $3 million in 2011.
| Source Agencies: | 304 Comptroller of Public Accounts, 601 Department of Transportation
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| LBB Staff: | JOB, SD, CT
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