Honorable Jane Nelson, Chair, Senate Committee on Finance
FROM:
Ursula Parks, Director, Legislative Budget Board
IN RE:
SB1032 by Taylor, Larry (Relating to an exemption from and a limitation on the sales tax imposed on certain boats and boat motors.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for SB1032, As Introduced: a negative impact of ($1,958,000) through the biennium ending August 31, 2019.
Fiscal Year
Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2018
($960,000)
2019
($998,000)
2020
($1,026,000)
2021
($1,074,000)
2022
($1,112,000)
Fiscal Year
Probable Revenue (Loss) from General Revenue Fund 1
Probable Revenue (Loss) from Game,Fish,Water Safety Account 9
2018
($960,000)
($50,000)
2019
($998,000)
($52,000)
2020
($1,026,000)
($54,000)
2021
($1,074,000)
($56,000)
2022
($1,112,000)
($58,000)
Fiscal Analysis
This bill would amend Chapter 160 of the Tax Code, regarding taxes on sales and use of boats and boat motors.
The bill would add new Section 160.0246 to provide that taxable boats and boat motors are exempt from sales tax if, within 10 days of the sale, the boat or boat motor is sold in this state for use in another state or nation and is removed from this state; or the boat or boat motor is sold in this state for use in another state and not later than 10 days after purchase it is docked or placed at a repair or modification facility that is registered with the Comptroller, is only used to test any repairs or modifications, and is removed from Texas within 20 days after repairs or modifications are completed.
The bill would add new Section 160.026 to limit the amount of tax imposed under Section 160.021 (retail sales tax) on the sale of a taxable boat or boat motor to $18,750.
This bill would take effect September 1, 2017.
Methodology
As boats sold for removal from the state are not subject to titling and registration in Texas, it is expected that tax is rarely paid on such boats and consequently the fiscal implications of proposed Section 160.0246 would be negligible.
The estimated fiscal implications are for proposed Section 160.026, limiting the tax on boats or motors to $18,750. The estimates are based on historical data on taxable sales prices and sales tax paid for boats registered with TPWD, extrapolated through 2022 based on the forecast of growth in boat tax revenue adopted for the 2018-19 Biennial Revenue Estimate.
Technology
The Texas Parks and Wildlife Department indicates there would be a cost to re-program their Boat Titling and Registration System. It is assumed this cost could be absorbed within existing resources.
Local Government Impact
Although the sales tax on boats may be paid to county tax assessor-collectors, most boat tax is paid to the Texas Parks and Wildlife Department (TPWD) when titling and registering boats with the department. Therefore the loss of the counties 5 percent collection allowance on the foregone boat sales tax revenue is not expected to be significant.
Source Agencies:
802 Parks and Wildlife Department, 304 Comptroller of Public Accounts