Texas House Bill HB3388

Texas 2013 - 83rd Regular

Caption

Relating to the computation of costs of goods sold for purposes of the franchise tax by certain taxable entities engaged in film or motion picture exhibition.

Impact

The bill clarifies how costs related to film acquisition and exhibition can be accounted for when calculating franchise tax obligations. This amendment is particularly significant for movie theaters, allowing them to potentially lower their tax liability by recognizing the expenses directly related to the films they exhibit. By specifying that expenses for the rights to use films can also be included, the bill aims to enhance the economic viability of movie exhibition businesses in the state.

Summary

House Bill 3388 seeks to amend the Texas Tax Code regarding the computation of costs of goods sold for taxable entities engaged in the film and motion picture exhibition. Specifically, it outlines provisions for movie theaters to subtract the costs associated with the acquisition, production, and exhibition of films from their taxable income. This change is intended to provide clarity on the costs that can be deducted and aligns with the legislative goals of supporting the film industry in Texas.

Contention

While the bill acts as a clarification of existing law, it has raised discussions around its potential impacts on state revenue from franchise taxes. Some lawmakers may express concern that by allowing for greater deductions, the state could see a reduction in tax income from the entertainment sector. Furthermore, there may be debates surrounding the fairness of these deductions compared to other industries not receiving similar tax benefits, raising questions about equity in tax treatment among different sectors.