| TO: | Honorable Jim Keffer, Chair, House Committee on Ways & Means |
| FROM: | John S. O'Brien, Director, Legislative Budget Board |
| IN RE: | HB2057 by Bonnen (Relating to state tax exemptions.), As Introduced |
The table below assumes an effective date of July 1, 2007 for the sales tax provisions and an effective date of January 1, 2008 for the franchise tax provisions.
| Fiscal Year | Probable Revenue Gain/(Loss) from GENERAL REVENUE FUND 1 |
Probable Revenue Gain/(Loss) from Cities |
Probable Revenue Gain/(Loss) from Transit Authorities |
Probable Revenue Gain/(Loss) from Counties |
|---|---|---|---|---|
| 2007 | $10,256,000 | $0 | $0 | $0 |
| 2008 | $130,605,000 | $25,079,000 | $8,604,000 | $3,236,000 |
| 2009 | $138,238,000 | $26,544,000 | $9,107,000 | $3,426,000 |
| 2010 | $146,612,000 | $28,152,000 | $9,659,000 | $3,633,000 |
| 2011 | $155,653,000 | $29,888,000 | $10,254,000 | $3,857,000 |
| 2012 | $165,476,000 | $31,775,000 | $10,902,000 | $4,100,000 |
| Fiscal Year | Probable Revenue Gain/(Loss) from Property Tax Relief Fund 304 |
|---|---|
| 2007 | $0 |
| 2008 | ($113,020,000) |
| 2009 | ($116,119,000) |
| 2010 | ($122,858,000) |
| 2011 | ($129,987,000) |
| 2012 | ($136,356,000) |
The table below assumes an effective date of October 1, 2007 for the sales tax provisions and an effective date of January 1, 2008 for the franchise tax provisions.
| Fiscal Year | Probable Revenue Gain/(Loss) from GENERAL REVENUE FUND 1 |
Probable Revenue Gain/(Loss) from Cities |
Probable Revenue Gain/(Loss) from Transit Authorities |
Probable Revenue Gain/(Loss) from Counties |
|---|---|---|---|---|
| 2008 | $108,837,000 | $18,809,000 | $6,453,000 | $2,427,000 |
| 2009 | $138,238,000 | $26,544,000 | $9,107,000 | $3,426,000 |
| 2010 | $146,612,000 | $28,152,000 | $9,659,000 | $3,633,000 |
| 2011 | $155,653,000 | $29,888,000 | $10,254,000 | $3,857,000 |
| 2012 | $165,476,000 | $31,775,000 | $10,902,000 | $4,100,000 |
| Fiscal Year | Probable Revenue Gain/(Loss) from Property Tax Relief Fund 304 |
|---|---|
| 2008 | ($113,020,000) |
| 2009 | ($116,119,000) |
| 2010 | ($122,858,000) |
| 2011 | ($129,987,000) |
| 2012 | ($136,356,000) |
The bill would amend Chapter 151 of the Tax Code to eliminate the sales tax exception for the repair, maintenance, creation, and restoration of computer programs from the definition of "taxable services." Under the provisions of the bill, these services would now be subject to taxation.
The bill would amend Chapter 171 of the Tax Code, relating to the franchise tax, to increase the amount of total revenue a taxable entity could have during a reporting period and owe no tax for that period. The nontaxable amount would increase from $300,000 to $750,000 in total revenue.
The sales tax provisions would take effect July 1, 2007 if it receives two-thirds majority votes in each house; otherwise, it would take effect October 1, 2007. The franchise tax provisions would take effect January 1, 2008 and apply to reports due on or after that date.
The estimate of the fiscal impact of the sales tax provisions to the General Revenue Fund 0001 provided by the Comptroller of Public Accounts is based on data on the Texas sale of custom computer programming services gathered from the U.S. Census Bureau. For the purpose of this analysis, the Comptroller multiplied the data by the state sales tax rate, adjusted for the potential effective dates of July 1, 2007 and October 1, 2007, and extrapolated through fiscal 2012. The fiscal impact of the sales tax provisions on units of local government were estimated proportionally.
The estimate of the fiscal impact of the franchise tax provisions from the Comptroller's Office is based on information from the Internal Revenue Service on total receipts received by corporations and partnerships categorized by receipts size. Because the bill does not specify the state fund to be affected, this estimate assumes that the fiscal impact would occur in the Property Tax Relief Fund 0304, rather than the General Revenue Fund 0001. The General Revenue Fund will have to make up the portion of property tax relief not funded by the revenues in the Property Tax Relief Fund.
| Source Agencies: | 304 Comptroller of Public Accounts
|
| LBB Staff: | JOB, CT, SD, EB
|