LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 81ST LEGISLATIVE REGULAR SESSION April 26, 2009 TO: Honorable Rene Oliveira, Chair, House Committee on Ways & Means FROM: John S. O'Brien, Director, Legislative Budget Board IN RE:HB1996 by McCall (Relating to exempting the sale of certain property used for research and development from the sales tax.), As Introduced Estimated Two-year Net Impact to General Revenue Related Funds for HB1996, As Introduced: a negative impact of ($162,224,000) through the biennium ending August 31, 2011.
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 81ST LEGISLATIVE REGULAR SESSION
April 26, 2009
TO: Honorable Rene Oliveira, Chair, House Committee on Ways & Means FROM: John S. O'Brien, Director, Legislative Budget Board IN RE:HB1996 by McCall (Relating to exempting the sale of certain property used for research and development from the sales tax.), As Introduced
TO: Honorable Rene Oliveira, Chair, House Committee on Ways & Means
FROM: John S. O'Brien, Director, Legislative Budget Board
IN RE: HB1996 by McCall (Relating to exempting the sale of certain property used for research and development from the sales tax.), As Introduced
Honorable Rene Oliveira, Chair, House Committee on Ways & Means
Honorable Rene Oliveira, Chair, House Committee on Ways & Means
John S. O'Brien, Director, Legislative Budget Board
John S. O'Brien, Director, Legislative Budget Board
HB1996 by McCall (Relating to exempting the sale of certain property used for research and development from the sales tax.), As Introduced
HB1996 by McCall (Relating to exempting the sale of certain property used for research and development from the sales tax.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for HB1996, As Introduced: a negative impact of ($162,224,000) through the biennium ending August 31, 2011.
Estimated Two-year Net Impact to General Revenue Related Funds for HB1996, As Introduced: a negative impact of ($162,224,000) through the biennium ending August 31, 2011.
General Revenue-Related Funds, Five-Year Impact: Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds 2010 ($71,917,000) 2011 ($90,307,000) 2012 ($96,430,000) 2013 ($102,620,000) 2014 ($108,072,000)
2010 ($71,917,000)
2011 ($90,307,000)
2012 ($96,430,000)
2013 ($102,620,000)
2014 ($108,072,000)
All Funds, Five-Year Impact: Fiscal Year Probable Revenue (Loss) fromGeneral Revenue Fund1 Probable Revenue (Loss) fromCities Probable Revenue (Loss) fromTransit Authorities Probable Revenue (Loss) fromCounties 2010 ($71,917,000) ($12,038,000) ($4,105,000) ($1,701,000) 2011 ($90,307,000) ($16,795,000) ($5,727,000) ($2,373,000) 2012 ($96,430,000) ($17,934,000) ($6,116,000) ($2,534,000) 2013 ($102,620,000) ($19,085,000) ($6,508,000) ($2,697,000) 2014 ($108,072,000) ($20,099,000) ($6,854,000) ($2,840,000)
Fiscal Year Probable Revenue (Loss) fromGeneral Revenue Fund1 Probable Revenue (Loss) fromCities Probable Revenue (Loss) fromTransit Authorities Probable Revenue (Loss) fromCounties 2010 ($71,917,000) ($12,038,000) ($4,105,000) ($1,701,000) 2011 ($90,307,000) ($16,795,000) ($5,727,000) ($2,373,000) 2012 ($96,430,000) ($17,934,000) ($6,116,000) ($2,534,000) 2013 ($102,620,000) ($19,085,000) ($6,508,000) ($2,697,000) 2014 ($108,072,000) ($20,099,000) ($6,854,000) ($2,840,000)
2010 ($71,917,000) ($12,038,000) ($4,105,000) ($1,701,000)
2011 ($90,307,000) ($16,795,000) ($5,727,000) ($2,373,000)
2012 ($96,430,000) ($17,934,000) ($6,116,000) ($2,534,000)
2013 ($102,620,000) ($19,085,000) ($6,508,000) ($2,697,000)
2014 ($108,072,000) ($20,099,000) ($6,854,000) ($2,840,000)
Fiscal Analysis
The bill would amend Chapter 151 of the Tax Code to create a sales tax exemption for tangible personal property used directly in research or development by a person primarily engaged in manufacturing, telecommunications, or the performance of scientific or technical services related to manufacturing or telecommunications. The exemption would apply to tangible personal property used or consumed in research or development regardless of whether it was used in the actual manufacturing or fabrication of items for ultimate sale or directly used for the provision of telecommunications services. The exemption would not apply to office equipment or supplies, or equipment or supplies used in sales, distribution, or transportation activities. A taxpayer who pays tax on items that qualify for the exemption would be entitled to either a credit of the amount paid against sales taxes owed or a refund of the amount paid. The bill would take effect October 1, 2009.
The bill would amend Chapter 151 of the Tax Code to create a sales tax exemption for tangible personal property used directly in research or development by a person primarily engaged in manufacturing, telecommunications, or the performance of scientific or technical services related to manufacturing or telecommunications.
The exemption would apply to tangible personal property used or consumed in research or development regardless of whether it was used in the actual manufacturing or fabrication of items for ultimate sale or directly used for the provision of telecommunications services. The exemption would not apply to office equipment or supplies, or equipment or supplies used in sales, distribution, or transportation activities.
A taxpayer who pays tax on items that qualify for the exemption would be entitled to either a credit of the amount paid against sales taxes owed or a refund of the amount paid.
The bill would take effect October 1, 2009.
Methodology
Sales of tangible personal property used for research and development in manufacturing and telecommunications were estimated based on data gathered from the National Science Foundation and from Comptroller tax files. Sales were multiplied by the state sales tax rate; adjusted for the effective date of October 1, 2009; and extrapolated through fiscal 2014.
Local Government Impact
There would be a proportional loss of sales tax revenue to units of local government.
Source Agencies: 304 Comptroller of Public Accounts
304 Comptroller of Public Accounts
LBB Staff: JOB, MN, SD, KK
JOB, MN, SD, KK