Honorable Tommy Williams, Chair, Senate Committee on Finance
FROM:
Ursula Parks, Director, Legislative Budget Board
IN RE:
HB213 by Hilderbran (relating to the $1 million total revenue exemption for the franchise tax.), Committee Report 2nd House, Substituted
Estimated Two-year Net Impact to General Revenue Related Funds for HB213, Committee Report 2nd House, Substituted: an impact of $0 through the biennium ending August 31, 2015.
Additionally, the bill will have a direct impact of a revenue loss to the Property Tax Relief Fund of ($164,032,000) for the 2014-15 biennium. Any loss to the Property Tax Relief Fund must be made up with an equal amount of General Revenue to fund the Foundation School Program.
Fiscal Year
Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2014
$0
2015
$0
2016
$0
2017
$0
2018
$0
Fiscal Year
Probable Revenue (Loss) from Property Tax Relief Fund 304
2014
($81,848,000)
2015
($82,184,000)
2016
($83,727,000)
2017
($82,241,000)
2018
($81,569,000)
Fiscal Analysis
The bill would amend Chapter 171 of the Tax Code, regarding the franchise tax, to increase the amount of total revenue below which a taxable entity would owe no tax to $1 million for reports due in 2014 and later. The amount in current law is $600,000.
The bill would repeal sections of Chapter 171 which would not be relevant with a permanent $1 million total revenue base for owing no franchise tax, to include provisions for tax liability discounts for taxable entities with total revenue between $600,000 and $900,000; adjustments to the tax liability discount revenue limits based on changes in the consumer price index; and the availability of the tax liability discounts for taxable entities filing the EZ form.
The bill would take effect immediately upon enactment, assuming that it received the requisite two-thirds majority votes in both houses of the Legislature. Otherwise, it would take effect September 1, 2013.
Methodology
The estimated fiscal impact of the bill is based on data from franchise tax reports from taxable entities with total revenue between $600,000 and $1 million. The fiscal impact would be the same for immediate effect and for a September 1, 2013 effective date.
Technology
There would a one-time technology cost of $73,000 in fiscal year 2014 for programming maintenance and system support costs.
Local Government Impact
No fiscal implication to units of local government is anticipated.