Honorable Dennis Bonnen, Chair, House Committee on Ways & Means
FROM:
Ursula Parks, Director, Legislative Budget Board
IN RE:
HB84 by White, James (Relating to the exclusion of certain funds in determining total revenue for purposes of the franchise tax by taxable entities engaged in the business of harvesting trees for wood.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for HB84, As Introduced: an impact of $0 through the biennium ending August 31, 2017.
However, the bill will have a direct impact of a revenue loss to the Property Tax Relief Fund of ($2,050,000) for the 2016-17 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
2016
$0
2017
$0
2018
$0
2019
$0
2020
$0
Fiscal Year
Probable Revenue (Loss) from Property Tax Relief Fund 304
2016
($1,000,000)
2017
($1,050,000)
2018
($1,100,000)
2019
($1,150,000)
2020
($1,200,000)
Fiscal Analysis
The bill would amend Chapter 171 of the Tax Code, regarding the franchise tax, to add an exclusion from total revenue for taxable entities primarily engaged in the business of harvesting trees for wood. Such taxable entities would be required to exclude from total revenue the payments made to a person who owns or controls the land from which the trees are harvested, provided that person is not the taxable entity.
The bill would take effect January 1, 2016, and apply to franchise tax reports due on or after that date.
Methodology
The estimated fiscal impact is based on information in the Comptroller's franchise tax databases for taxable entities in the timber and logging industry.
Local Government Impact
No fiscal implication to units of local government is anticipated.