LEGISLATIVE BUDGET BOARD
Austin, Texas
 
FISCAL NOTE, 83RD LEGISLATIVE REGULAR SESSION
 
April 26, 2013

TO:
Honorable Harvey Hilderbran, Chair, House Committee on Ways & Means
 
FROM:
Ursula Parks, Director, Legislative Budget Board
 
IN RE:
HB3572 by Hilderbran (relating to the administration, collection, and enforcement of taxes on mixed beverages; imposing a tax on sales of mixed beverages; decreasing the rate of the current tax on mixed beverages.), Committee Report 1st House, Substituted



Estimated Two-year Net Impact to General Revenue Related Funds for HB3572, Committee Report 1st House, Substituted: a positive impact of $21,295,000 through the biennium ending August 31, 2015.

The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.



Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2014 $6,897,000
2015 $14,398,000
2016 $15,130,000
2017 $15,912,000
2018 $16,728,000




Fiscal Year Probable Savings/(Cost) from
General Revenue Fund
1 		Probable Revenue Gain/(Loss) from
General Revenue Fund
1 		Probable Revenue Gain/(Loss) from
Counties		 Probable Revenue Gain/(Loss) from
Municipalities
2014 ($2,225,000) $9,122,000 $1,213,000 $1,122,000
2015 ($225,000) $14,623,000 $1,947,000 $1,800,000
2016 ($225,000) $15,355,000 $2,045,000 $1,890,000
2017 ($225,000) $16,137,000 $2,149,000 $1,987,000
2018 ($225,000) $16,953,000 $2,258,000 $2,087,000

Fiscal Year Change in Number of State Employees from FY 2013
2014 5.0
2015 5.0
2016 5.0
2017 5.0
2018 5.0

Fiscal Analysis

The bill would amend Chapter 183 of the Tax Code, regarding the mixed beverage tax, to reduce the rate of the tax on the gross receipts from alcohol sales of mixed beverage permittees from 14 percent to 7 percent.
 
The bill also would create a mixed beverage sales tax at a rate of 8.25 percent of the sales price of all drinks that are subject to the mixed beverage gross receipts tax.  The mixed beverage sales tax would be administered, collected, and enforced in the same manner as the limited sales and use tax. Timely filer deductions and tax prepayment discounts related to the limited sales and use tax would not apply to the mixed beverage sales tax.  Also not applicable would be local option sales taxes under Subtitle C, Title 3, Tax Code.  However, the local allocations from the mixed beverage sales tax would be distributed in the same manner as the mixed beverage gross receipts tax.
 
The bill would take effect January 1, 2014.

Methodology

This fiscal impact analysis is based on the 2014-15 Biennial Revenue Estimate. The analysis assumes the new 8.25 percent sales tax rate, a 7 percent (formerly 14 percent) mixed beverage tax rate, and that permittees would not decrease current menu prices for mixed beverages.  Due to an expected increase in their outlays, consumers are expected to purchase somewhat fewer drinks.  The fiscal 2014 estimates were adjusted for a January 1, 2014 effective date.

The Comptroller's office estimates that they would need funding to hire additional enforcement field collection staff to handle the anticipated increase in workload and programming and system support costs to implement the new tax.


Technology

The Comptroller's office estimates a one-time technology cost of $2,000,000 in fiscal 2014 for
programming and system support costs.

Local Government Impact

There would be a revenue gain to counties and municipalities as shown in the table.


Source Agencies:
304 Comptroller of Public Accounts, 458 Alcoholic Beverage Commission
LBB Staff:
UP, KK, SD, AG