Honorable Jane Nelson, Chair, Senate Committee on Finance
FROM:
John McGeady, Assistant Director Sarah Keyton, Assistant Director Legislative Budget Board
IN RE:
SB1214 by Schwertner (Relating to the sales and use tax exemption for certain aircraft.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for SB1214, As Introduced: a negative impact of ($1,300,000) through the biennium ending August 31, 2021.
Fiscal Year
Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2020
($650,000)
2021
($650,000)
2022
($650,000)
2023
($650,000)
2024
($650,000)
Fiscal Year
Probable Revenue (Loss) from General Revenue Fund 1
Probable Revenue (Loss) from Cities
Probable Revenue (Loss) from Transit Authorities
Probable Revenue (Loss) from Counties & Special Districts
2020
($650,000)
($120,000)
($40,000)
($20,000)
2021
($650,000)
($120,000)
($40,000)
($20,000)
2022
($650,000)
($120,000)
($40,000)
($20,000)
2023
($650,000)
($120,000)
($40,000)
($20,000)
2024
($650,000)
($120,000)
($40,000)
($20,000)
Fiscal Analysis
The bill would amend Section 151.328 of the Tax Code relating to sales and use taxation of aircraft.
The bill would add Subdivision (G) to Subsection (a)(5) to include as exempt from sales tax an aircraft sold for any use necessary to operate a business that performs any service described by Subdivisions (A)-(F), which include: predator control; wildlife or livestock capture, surveys and census counts; animal or plant health inspection services; and crop dusting, pollination and seeding.
The bill would also amend Subsection (h) to provide that intrastate travel to a location where services in Subsection (a)(5) are performed would not disqualify an aircraft from the sales tax exemption.
The bill would take effect September 1, 2019.
Methodology
Exempt aircraft currently have a 30 mile travel limit each way to locations where the agricultural services take place. The bill would remove the current limit and allow agricultural aircraft to travel unlimited miles to service locations in the state and remain exempt. This amendment would have no significant fiscal implications.
The added Subdivision (G) to Section 151.328(a)(5) would provide exemption of any aircraft necessary for the operation of any type of business, provided the business performs any of the agricultural uses listed in Subdivisions (A)-(F) regardless whether the principal use of the aircraft is for performance of agricultural uses. This amendment significantly expands the scope of the exemption, as aircraft that are not exempt under current law as exclusively for agricultural use would be exempt if sold to any business for primary use in non-agricultural activities provided only that the business occasionally perform an agricultural service. The estimates above are based on industry reports of general aviation aircraft sales in the United States, apportioned to Texas and reduced for the portion assumed exempt under current law.
Local Government Impact
There would be a proportional loss of sales and use tax revenue from local taxing jurisdictions displayed in the tables above.