Texas Senate Bill SJR11

Texas 2021 - 87th 2nd C.S.

Caption

Proposing a constitutional amendment prohibiting the enactment of a law that imposes a tax on certain transactions that either convey a security or involve specified derivative contracts.

Impact

If SJR11 is approved and becomes part of the Texas Constitution, it would significantly alter how taxes are applied to various transactions related to securities and derivatives. The amendment explicitly states that from January 1, 2022, no occupation tax may be imposed on registered securities market operators or any taxes on transactions they conduct. This change is expected to impact the financial industry positively, providing more clarity and stability for operators by guaranteeing that their transactions will no longer face state taxation, thus encouraging more business activity in Texas.

Summary

SJR11 proposes a constitutional amendment to the Texas Constitution that aims to prohibit the enactment of laws imposing taxes on certain transactions that involve securities or specified derivative contracts. This amendment is introduced as a response to concerns regarding the potential burden such taxes may place on businesses operating within the financial sector, particularly securities market operators. The intent is to create a more favorable business environment for these entities by ensuring that they are not subjected to additional taxation at the state level.

Contention

While proponents of SJR11 argue that it creates an environment that fosters economic growth and attracts financial businesses to Texas, critics may view it as a measure that limits state revenue options. The bill preserves certain taxation powers, as outlined in its exceptions for general business taxes, mineral production taxes, insurance premium taxes, sales taxes, and document processing fees. Such limitations may spark debate about the need for a balanced approach that supports business growth while ensuring adequate funding for public services through taxation.