BILL ANALYSIS
Senate Research Center H.B. 3016
By: Hill (Staples)
AUTHOR'S/SPONSOR'S STATEMENT OF INTENT
Wholesale distributors sell drugs to hospitals and health care providers. Due to the nature of the health care industry and the nature of drugs specifically, these distributors generally maintain an inventory of drugs in excess of what typical market demands would otherwise require in order to meet the demand of public health purposes, emergencies, disasters, and homeland security concerns. This results in distributors holding greater than market quantities of drugs in inventory and being taxed for property tax purposes in excess of the typical market place.
H.B. 3016 requires the chief appraiser, in determining the market value of drug supplies held in surplus, to exclude as economic obsolescence from the market value cost attributable to drug supplies held in surplus which are in excess of the amount of drugs held for normal market purposes.
RULEMAKING AUTHORITY
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Section 23.12, Tax Code, by adding Subsection (h), as follows:
(h) Requires the chief appraiser to exclude as economic obsolescence from the market value certain costs in excess of the amount of drugs held for normal market purposes, in determining the market value of drug supplies held in surplus. Provides the items to be included in "drug supplies held in surplus." Provides that a wholesale distributor of drugs will take certain actions in calculating the number of days drug supplies are held in surplus or held in inventory.
SECTION 2. Effective date: January 1, 2006.