LEGISLATIVE BUDGET BOARD

Austin, Texas

FISCAL NOTE, 81ST LEGISLATIVE REGULAR SESSION

April 15, 2009

TO:	Honorable Rene Oliveira, Chair, House Committee on Ways & Means
FROM:	John S. O'Brien, Director, Legislative Budget Board
IN RE:	HB3185 by Jackson, Jim (Relating to increasing the tax rates imposed on cigars to fund additional property tax relief.), As Introduced

The bill will have a direct impact of a revenue gain to the Property Tax Relief Fund of $36,315,000 for the 2010-11 biennium.  Any gain to the Property Tax Relief Fund will free up General Revenue of the same amount.

General Revenue-Related Funds, Five-Year Impact:

Fiscal Year	Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2010	$0
2011	$0
2012	$0
2013	$0
2014	$0

All Funds, Five-Year Impact:

Fiscal Year	Probable Revenue Gain/(Loss) from Property Tax Relief Fund 304
2010	$16,903,000
2011	$19,412,000
2012	$19,805,000
2013	$20,202,000
2014	$20,602,000

Fiscal Analysis

The bill would amend Chapter 155 of the Tax Code, regarding the tax on cigars and other tobacco products.

The bill would increase the tax on cigars weighing three pounds or less per 1,000 cigars to $70.50 per 1,000 cigars from the current rate of one cent per 10 cigars. The tax on cigars weighing more than three pounds per 1,000 cigars, selling at a factory list price of more than 3.3 cents each and containing a substantial amount of nontobacco ingredients would increase to $70.50 per 1,000 cigars from the current rate of $15 per 1,000 cigars.

Under the provisions of the bill, the portion of taxes collected on the types of cigars affected by the bill above the taxes that would have been collected at the tax rates in effect prior to this bill's effective date would be allocated to the Property Tax Relief Fund 0304.

The bill would take effect September 1, 2009.

Methodology

The Comptroller of Public accounts based this estimate on historical data from the Comptroller's taxpayer files and forecasts from the Comptroller's 2010-11 Biennial Revenue Estimate. Estimated fiscal impacts were adjusted for potential consumption impacts, tax avoidance effects, and implementation lags.

Local Government Impact

No fiscal implication to units of local government is anticipated.

Source Agencies:

304 Comptroller of Public Accounts

LBB Staff:

JOB, MN, SD