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 the wholesale and retail sale of certain alcoholic beverages; imposing a tax on sales of alcoholic beverages at the wholesale level.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for HB3572, As Introduced: a negative impact of ($317,061,046) 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
($153,193,135)
2015
($163,867,911)
2016
($172,000,715)
2017
($180,837,258)
2018
($189,900,459)
Fiscal Year
Probable Savings/(Cost) from General Revenue Fund 1
Probable Revenue Gain/(Loss) from General Revenue Fund 1
Probable Revenue Gain/(Loss) from Municipalities
Probable Revenue Gain/(Loss) from Counties and Special Districts
2014
($1,714,135)
($151,479,000)
($161,000)
($52,775,000)
2015
($1,792,911)
($162,075,000)
($172,000)
($56,466,000)
2016
($1,812,715)
($170,188,000)
($181,000)
($59,293,000)
2017
($1,989,258)
($178,848,000)
($190,000)
($62,310,000)
2018
($2,001,459)
($187,899,000)
($200,000)
($65,463,000)
Fiscal Year
Probable Revenue Gain/(Loss) from Transit Authorities
Change in Number of State Employees from FY 2013
2014
$19,612,000
32.0
2015
$20,984,000
32.0
2016
$22,034,000
32.0
2017
$23,155,000
32.0
2018
$24,327,000
32.0
Fiscal Analysis
The bill would amend Chapters 151 and 183 of the Tax Code to change the mixed beverage tax from a gross receipts tax at the retail level to a sales tax at the wholesale level and to subject drinks served by mixed beverage permittees to the state and local sales and use taxes.
Under current law, the mixed beverage tax is levied at a 14 percent rate on the gross receipts from retail sales by mixed beverage permit holders and similar retailers, while the wholesale to retail transaction is not subject to taxation. Under the bill's provisions, the new wholesale alcoholic beverage tax would be levied at a 14 percent rate on the sales price of alcoholic beverages sold by wholesalers to mixed beverage permit holders and similar retailers. The bill's provisions would provide that final sales to customers by permittees would be subject to the state (and local) sales tax.
The bill would require wholesalers, distributors, package store local distributors, certain brewers and certain manufacturers, on their sales of all alcoholic beverages to mixed beverage permit holders and similar retailers, to disclose on the invoice the amount of the wholesale alcoholic beverage tax to be paid by the seller on the purchase. The wholesale sellers of those alcoholic beverages would file a report and remit the tax due to the Texas Alcoholic Beverage Commission (TABC), which also would administer and enforce the new tax. The Comptroller would remain responsible for allocations of revenue from the new tax to counties and municipalities.
The bill would repeal Sections 151.054(d), 151.465, 151.466, 183.022(c), and 183.052 of the Tax Code.
The bill would take effect January 1, 2014.
Methodology
The fiscal impact analysis is based on the 2014-15 Biennial Revenue Estimate. State tax effects include the loss of mixed beverage revenue, as it is collected now; the addition of a wholesale to permittee tax at 14 percent; and the addition of state sales tax at 6.25 percent to final sales.
The implications to cities and counties are similar in nature. The implications to transit authorities reflect the additional sales tax only.
TABC estimates administrative costs necessary to hire 32 Full-Time Equivalents (FTEs) to administer and enforce the new tax.
Technology
Information technology costs include enhancements to Versa Regulation, a COTS system, to provide a method of capturing tax information being reported. Minimal information required would include reporting entity, report month, postmarked date and associated payment. A batch process is needed to determine late-filers and non-filers and produce a standard letter. One time staff augmentation hours are needed to develop new reports for tracking compliance and initiating non-compliance actions.
Local Government Impact
The implications to cities, counties and special districts, and transit authorities are shown in the table. The implications to transit authorities reflect the additional sales tax only.
Source Agencies:
304 Comptroller of Public Accounts, 458 Alcoholic Beverage Commission