This website will be unavailable from Friday, April 26, 2024 at 6:00 p.m. through Monday, April 29, 2024 at 7:00 a.m. due to data center maintenance.
Floor Packet Page No. 147
Amend CSHB 3, by striking SECTION 3A.01 and by adding the
following new sections and renumbering any remaining sections
accordingly:
SECTION ___. Amend Section 151.318(a), (b) and (c) Tax Code,
as follows:
Sec. 151.31. PROPERTY USED IN MANUFACTURING. (a) The
following items are subject to the sales tax at a rate of 3.25
percent [exempted from the taxes imposed by this chapter] if sold,
leased, or rented to, or stored, used, or consumed by a
manufacturer:
(1) tangible personal property that will become an
ingredient or component part of tangible personal property
manufactured, processed, or fabricated for ultimate sale;
(2) tangible personal property directly used or
consumed in or during the actual manufacturing, processing, or
fabrication of tangible personal property for ultimate sale if the
use or consumption of the property is necessary or essential to the
manufacturing, processing, or fabrication operation and directly
makes or causes a chemical or physical change to:
(A) the product being manufactured, processed, or
fabricated for ultimate sale; or
(B) any intermediate or preliminary product that
will become an ingredient or component part of the product being
manufactured, processed, or fabricated for ultimate sale;
(3) services performed directly on the product being
manufactured prior to its distribution for sale and for the purpose
of making the product more marketable;
(4) actuators, steam production equipment and its
fuel, in-process flow through tanks, cooling towers, generators,
heat exchangers, transformers and the switches, breakers,
capacitor banks, regulators, relays, reclosers, fuses,
interruptors, reactors, arrestors, resistors, insulators,
instrument transformers, and telemetry units that are related to
the transformers, electronic control room equipment, computerized
control units, pumps, compressors, and hydraulic units, that are
used to power, supply, support, or control equipment that qualifies
for exemption under Subdivision (2) or (5) or to generate
electricity, chilled water, or steam for ultimate sale;
transformers located at an electric generating facility that
increase the voltage of electricity generated for ultimate sale,
the electrical cable that carries the electricity from the electric
generating equipment to the step-up transformers, and the switches,
breakers, capacitor banks, regulators, relays, reclosers, fuses,
interruptors, reactors, arrestors, resistors, insulators,
instrument transformers, and telemetry units that are related to
the step-up transformers; and transformers that decrease the
voltage of electricity generated for ultimate sale and the
switches, breakers, capacitor banks, regulators, relays,
reclosers, fuses, interruptors, reactors, arrestors, resistors,
insulators, instrument transformers, and telemetry units that are
related to the step-down transformers;
(5) tangible personal property used or consumed in the
actual manufacturing, processing, or fabrication of tangible
personal property for ultimate sale if the use or consumption of the
property is necessary and essential to a pollution control process;
(6) lubricants, chemicals, chemical compounds, gases,
or liquids that are used or consumed during the actual
manufacturing, processing, or fabrication of tangible personal
property for ultimate sale if their use or consumption is necessary
and essential to prevent the decline, failure, lapse, or
deterioration of equipment exempted by this section;
(7) gases used on the premises of a manufacturing plant
to prevent contamination of raw material or product, or to prevent a
fire, explosion, or other hazardous or environmentally damaging
situation at any stage in the manufacturing process or in loading or
storage of the product or raw material on premises;
(8) tangible personal property used or consumed during
the actual manufacturing, processing, or fabrication of tangible
personal property for ultimate sale if the use or consumption of the
property is necessary and essential to a quality control process
that tests tangible personal property that is being manufactured,
processed, or fabricated for ultimate sale;
(9) safety apparel or work clothing that is used during
the actual manufacturing, processing, or fabrication of tangible
personal property for ultimate sale if:
(A) the manufacturing process would not be
possible without the use of the apparel or clothing; and
(B) the apparel or clothing is not resold to the
employee;
(10) tangible personal property used or consumed in the
actual manufacturing, processing, or fabrication of tangible
personal property for ultimate sale if the use or consumption of the
property is necessary and essential to comply with federal, state,
or local laws or rules that establish requirements related to
public health; and
(11) tangible personal property specifically installed
to:
(A) reduce water use and wastewater flow volumes
from the manufacturing, processing, fabrication, or repair
operation;
(B) reuse and recycle wastewater streams
generated within the manufacturing, processing, fabrication, or
repair operation; or
(C) treat wastewater from another industrial or
municipal source for the purpose of replacing existing freshwater
sources in the manufacturing, processing, fabrication, or repair
operation.
(b) The following items are exempted from the taxes imposed
by this chapter [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;
(2) semiconductor fabrication cleanrooms and
equipment; and
(3) pharmaceutical biotechnology cleanrooms and
equipment that are installed as part of the construction of a new
facility with a value of at least $150 million and on which
construction began after July 1, 2003, and before August 31, 2004.
(c) The following items are subject to the tax imposed by
this Chapter at the rate under Section 151.051(b) [The exemption
does not include]:
(1) intraplant transportation equipment, including
intraplant transportation equipment used to move a product or raw
material in connection with the manufacturing process and
specifically including all piping and conveyor systems, provided
that the following remain eligible for the exemption:
(A) piping or conveyor systems that arc a
component part of a single item of manufacturing equipment or
pollution control equipment eligible for the exemption under
Subsection (a)(2), (a)(4), or (a)(5);
(B) piping through which the product or an
intermediate or preliminary product that will become an ingredient
or component part of the product is recycled or circulated in a loop
between the single item of manufacturing equipment and the
ancillary equipment that supports only that single item of
manufacturing equipment if the single item of manufacturing
equipment and the ancillary equipment operate together to perform a
specific step in the manufacturing process; and
(C) piping through which the product or an
intermediate or preliminary product that will become an ingredient
or component part of the product is recycled back to another single
item of manufacturing equipment and its ancillary equipment in the
same manufacturing process;
(2) hand tools;
(3) maintenance supplies not otherwise exempted under
this section, maintenance equipment, janitorial supplies or
equipment, office equipment or supplies, equipment or supplies used
in sales or distribution activities, research or development of new
products, or transportation activities;
(4) machinery and equipment or supplies to the extent
not otherwise exempted under this section used to maintain or store
tangible personal property; or
(5) tangible personal property used in the
transmission or distribution of electricity, including
transformers, cable, switches, breakers, capacitor banks,
regulators, relays, reclosers, fuses, interruptors, reactors,
arrestors, resistors, insulators, instrument transformers, and
telemetry units not otherwise exempted under this section, and
lines, conduit, towers, and poles.