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A BILL TO BE ENTITLED
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AN ACT
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relating to the repeal of or limitations on certain state and local |
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taxes, including school district maintenance and operations ad |
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valorem taxes, the enactment of state and local value added taxes, |
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and related school finance reform; imposing taxes. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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ARTICLE 1. STATE VALUE ADDED TAX |
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SECTION 1.01. DEFINITIONS. In this article: |
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(1) "Input tax" means the aggregate amount of all |
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state and local value added taxes imposed under this Act that have |
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accrued with respect to services and property supplied to a |
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taxpayer during a calendar quarter and used or held for use by the |
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taxpayer in the ordinary course of the taxpayer's trade or |
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business. |
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(2) "Output tax" means the aggregate amount of all |
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state and local value added taxes imposed under this Act that have |
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accrued with respect to services and property supplied by a |
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taxpayer during a calendar quarter in the ordinary course of the |
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taxpayer's trade or business. |
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(3) "Taxpayer" means a person on whom the value added |
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tax is imposed. |
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(4) "Value added tax" means the tax imposed under |
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Section 1.02 of this article. |
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SECTION 1.02. VALUE ADDED TAX IMPOSED. A value added tax is |
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imposed on each person in this state who supplies any service or |
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property in the ordinary course of a trade or business in which the |
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person engages for profit. |
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SECTION 1.03. RATE OF TAX. The rate of the value added tax |
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is 6.72 percent of the taxpayer's taxable receipts from the supply |
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of services or property. |
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SECTION 1.04. DETERMINATION OF TAX PAYABLE. The total |
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amount of state and local value added taxes under this Act payable |
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by a taxpayer for a calendar quarter is the amount, if any, by which |
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the taxpayer's output tax exceeds the taxpayer's input tax. |
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SECTION 1.05. EXEMPTIONS. (a) The comptroller by rule |
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shall exempt from the value added tax: |
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(1) small businesses; |
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(2) governmental entities; and |
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(3) religious, educational, and public service |
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organizations. |
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(b) The comptroller shall refund the amount of any input tax |
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that has been accrued by an entity exempt under Subsection (a) of |
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this section. |
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SECTION 1.06. EXCLUSIONS. The comptroller by rule shall |
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exclude the following services and property from the value added |
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tax: |
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(1) monetary instruments, financial assets, and |
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investments; |
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(2) intercompany services; |
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(3) employment services; |
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(4) incidental transactions; |
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(5) transfers of common interests in property; |
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(6) services and property taxed by other law, |
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including Chapters 201 and 202, Tax Code; and |
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(7) services and property this state is prohibited |
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from taxing by federal law or the Texas Constitution. |
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SECTION 1.07. RULES. The comptroller shall adopt all rules |
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necessary to implement, administer, and enforce the state value |
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added tax and all local value added taxes under this Act. |
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SECTION 1.08. DISPOSITION OF REVENUE. All proceeds from |
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the collection of the value added tax shall be deposited to the |
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credit of the general revenue fund. |
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SECTION 1.09. EFFECTIVE DATE OF ARTICLE. This article |
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takes effect January 1, 2030. |
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ARTICLE 2. LOCAL VALUE ADDED TAXES |
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SECTION 2.01. LOCAL SALES AND USE TAXES PROHIBITED. |
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Notwithstanding any other law, a political subdivision may not |
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impose a sales or use tax on or after the effective date of this |
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article. |
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SECTION 2.02. LOCAL VALUE ADDED TAXES. (a) A political |
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subdivision that was authorized to impose a sales and use tax |
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immediately before the effective date of this article may impose a |
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local value added tax on and after the effective date of this |
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article. |
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(b) A local value added tax is administered, collected, and |
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enforced by the comptroller in the same manner as the state value |
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added tax. The tax applies to the supply of services or property in |
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the territory of the political subdivision. |
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(c) The comptroller shall allocate and remit to each |
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appropriate taxing jurisdiction proceeds from the collection of |
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local value added taxes by the comptroller. |
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SECTION 2.03. RATES OF LOCAL VALUE ADDED TAXES. (a) The |
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combined rate of all local value added taxes may not exceed two |
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percent at any location in the territory of a political |
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subdivision. |
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(b) The maximum combined rate provided by Subsection (a) of |
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this section does not apply to or include a school district |
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enrichment value added tax under Article 3 of this Act. |
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(c) On the effective date of this article, a political |
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subdivision may begin imposing the local value added tax at a rate |
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not to exceed the rate at which the political subdivision imposed a |
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sales and use tax immediately before the effective date of this |
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article. Subject to Subsection (a) of this section, the governing |
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body of a political subdivision that imposes a local value added tax |
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may adopt an order or ordinance changing the rate of or repealing |
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the tax imposed by the political subdivision. |
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SECTION 2.04. EFFECTIVE DATE OF ARTICLE. This article |
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takes effect January 1, 2030. |
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ARTICLE 3. SCHOOL DISTRICT ENRICHMENT VALUE ADDED TAX |
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SECTION 3.01. TAX AUTHORIZED. (a) A school district may |
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adopt or repeal a school district enrichment value added tax at an |
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election in which a majority of the qualified voters of the school |
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district approve the adoption or repeal of the tax. |
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(b) A school district enrichment value added tax is |
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administered, collected, and enforced by the comptroller in the |
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same manner as the state value added tax. The tax applies to the |
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supply of services or property in the territory of the school |
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district. |
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SECTION 3.02. MAXIMUM RATE. The rate of the school district |
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enrichment value added tax may not exceed 0.5 percent. |
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SECTION 3.03. USE OF TAX REVENUE BY SCHOOL DISTRICT. (a) |
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Revenue from the school district enrichment value added tax is for |
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the use and benefit of the school district. The revenue must be |
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used exclusively for school enrichment facilities and activities |
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and for the payment of the principal of and interest on debt |
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incurred to fund school enrichment facilities and activities. |
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(b) Revenue from the school district enrichment value added |
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tax may not be used for an expenditure or investment that is: |
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(1) necessary to comply with the legislature's duty |
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under Section 1, Article VII, Texas Constitution, to provide for |
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the general diffusion of knowledge and an efficient system of |
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public schools, including by providing funding for instructional |
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facilities; and |
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(2) eligible for funding through the Foundation School |
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Program. |
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SECTION 3.04. PLEDGE OF REVENUE. A school district may |
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pledge a portion of the revenue from the school district enrichment |
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value added tax for the payment of obligations issued to pay all or |
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part of the cost of a school enrichment project in the school |
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district. |
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SECTION 3.05. EFFECTIVE DATE OF ARTICLE. This article |
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takes effect January 1, 2030, but only if Section 4.01 of this Act |
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takes effect. If Section 4.01 of this Act does not take effect, |
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this article has no effect. |
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ARTICLE 4. SCHOOL DISTRICT MAINTENANCE AND OPERATIONS AD VALOREM |
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TAXES |
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SECTION 4.01. PROHIBITION ON IMPOSITION OF SCHOOL DISTRICT |
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MAINTENANCE AND OPERATIONS AD VALOREM TAXES. (a) Notwithstanding |
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any other law, a school district may not impose an ad valorem tax |
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for maintenance and operations purposes on or after January 1, |
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2030. To the extent of a conflict, this section controls over a |
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conflicting provision in a general or special law. |
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(b) The change in law made by this section does not affect |
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tax liability accruing before the effective date of this section. |
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(c) This section takes effect January 1, 2030, but only if |
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on or before that date a constitutional amendment to prohibit a |
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school district from imposing an ad valorem tax for maintenance and |
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operations purposes is approved by the voters. If such a |
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constitutional amendment is not approved by the voters on or before |
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that date, this section has no effect. |
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SECTION 4.02. REPORT. (a) The comptroller shall prepare a |
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report that recommends any change in constitutional or statutory |
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law needed to implement this Act. |
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(b) Not later than December 1, 2026, the comptroller shall |
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submit to the governor, lieutenant governor, speaker of the house |
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of representatives, and members of the legislature the report |
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required by Subsection (a) of this section. |
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(c) This section expires January 1, 2027. |
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SECTION 4.03. EFFECTIVE DATE OF ARTICLE. Except as |
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otherwise provided by this article, this article takes effect |
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September 1, 2025. |
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ARTICLE 5. SCHOOL FINANCE |
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SECTION 5.01. FOUNDATION SCHOOL PROGRAM FUNDING. (a) |
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Beginning with the 2030-2031 school year, the legislature shall |
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appropriate money to fund the Foundation School Program under |
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Chapter 48, Education Code, in an amount, excluding money collected |
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by a school district through the imposition of a tax, necessary to: |
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(1) comply with the legislature's duty under Section |
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1, Article VII, Texas Constitution, to provide for the general |
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diffusion of knowledge and an efficient system of public schools; |
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(2) achieve the state policy under Section 48.001, |
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Education Code, and the purposes of the Foundation School Program |
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under Section 48.002, Education Code; |
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(3) provide the basic allotment under Section 48.051, |
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Education Code, in an amount of at least $6,160 per student in |
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average daily attendance; and |
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(4) provide a minimal level of revenue to provide |
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school districts an opportunity to pursue locally funded enrichment |
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programs. |
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(b) This section takes effect January 1, 2030, but only if |
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Section 4.01 of this Act takes effect. If Section 4.01 of this Act |
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does not take effect, this section has no effect. |
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SECTION 5.02. EFFECT OF PROHIBITION ON SCHOOL DISTRICT |
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MAINTENANCE AND OPERATIONS TAX. (a) Article 4 of this Act does not |
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affect the authority of a school district to impose an enrichment |
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value added tax at a rate not to exceed 0.5 percent in accordance |
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with Article 3 of this Act for the purpose of providing additional |
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revenue to enrich the educational opportunities of students |
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enrolled in the district. The revenue attributable to the tax |
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described by this subsection is in addition to any money the |
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district receives from the state. |
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(b) A reference in the Education Code, the Tax Code, or any |
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other law to a school district's authority to impose a maintenance |
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tax or a maintenance and operations tax may not be construed in a |
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manner inconsistent with Article 4 of this Act or this section. |
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(c) This section takes effect January 1, 2030, but only if |
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Section 4.01 of this Act takes effect. If Section 4.01 of this Act |
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does not take effect, this section has no effect. |
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SECTION 5.03. STATE ASSISTANCE FOR TRANSITION TO SCHOOL |
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DISTRICT ENRICHMENT VALUE ADDED TAX. (a) For purposes of budgeting |
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for and funding of maintenance and operations and enrichment, the |
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commissioner of education shall assist school districts in |
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transitioning from the use of maintenance and operations tax |
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revenue to the use of state funding and enrichment value added tax |
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revenue. |
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(b) Not later than March 1, 2030, each school district shall |
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prepare and submit to the commissioner of education a transition |
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report certified by the comptroller that provides for the following |
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10 state fiscal years estimates regarding: |
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(1) budgets; |
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(2) sources of funding; and |
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(3) operating and capital expenditures. |
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(c) In the transition report prepared under Subsection (b) |
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of this section, a school district shall, in accordance with the |
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policy and purposes described by Sections 48.001 and 48.002, |
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Education Code, classify as "foundational" or "enrichment": |
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(1) each projected operating and capital expenditure |
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and the proportion of each current and projected debt; and |
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(2) the proportional amounts of current and projected |
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debts, based on the proposed uses for the revenue. |
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(d) Based on school districts' reports under Subsection (b) |
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of this section, the commissioner of education shall prepare and |
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present to the comptroller recommendations for refunding, |
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redeeming, or amending outstanding bonds for which school districts |
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pledged maintenance and operations tax revenue for payment. |
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(e) Notwithstanding any other law, the commissioner of |
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education shall provide state funding for the payment of any bonds |
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classified by a school district as a "foundational" bond under |
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Subsection (c) of this section. A school district assumes full |
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financial responsibility for any bond classified as an "enrichment" |
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bond. |
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(f) The commissioner of education shall annually prepare |
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and provide a report to the legislature and the comptroller |
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regarding funding under the Foundation School Program and the |
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transition by school districts to imposing a value added enrichment |
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tax. The report must include recommendations for legislative |
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action to facilitate the funding transitions required under this |
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Act while maintaining and improving the efficiency, quality, and |
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results of public education in this state. |
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(g) Subsection (e) of this section takes effect January 1, |
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2030, but only if Section 4.01 of this Act takes effect. If Section |
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4.01 of this Act does not take effect, Subsection (e) of this |
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section has no effect. |
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SECTION 5.04. EFFECTIVE DATE OF ARTICLE. Except as |
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otherwise provided by this article, this article takes effect |
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September 1, 2025. |
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ARTICLE 6. REPEALED PROVISIONS |
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SECTION 6.01. TAX CODE. (a) The following provisions of |
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the Tax Code are repealed: |
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(1) Chapter 142; |
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(2) Subtitles E, F, G, H, and J, Title 2; and |
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(3) Subtitle C, Title 3. |
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(b) The repeal of a provision by this section does not |
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affect tax liability accruing before the effective date of this |
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article. That liability continues in effect as if this article had |
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not been enacted, and the former law is continued in effect for the |
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collection of taxes due and for civil and criminal enforcement of |
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the liability for those taxes. |
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SECTION 6.02. EDUCATION CODE. (a) The following |
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provisions of the Education Code are repealed: |
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(1) Sections 45.0032, 48.255, 48.2551, 48.2552, |
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48.2553, 48.256, 48.257, and 48.275; and |
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(2) Chapter 49. |
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(b) This section takes effect only if Section 4.01 of this |
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Act takes effect. If Section 4.01 of this Act does not take effect, |
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this section has no effect. |
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SECTION 6.03. EFFECTIVE DATE OF ARTICLE. Except as |
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otherwise provided by this article, this article takes effect |
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January 1, 2030. |