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:HB2583 by Hartnett (Relating to the imposition of the sales and use tax on taxable items sold or provided under certain contracts.), As Introduced Estimated Two-year Net Impact to General Revenue Related Funds for HB2583, As Introduced: a negative impact of ($2,657,000) through the biennium ending August 31, 2011, if the effective date of the bill is July 1, 2009; or a negative impact of ($2,495,000) through the biennium ending August 31, 2011, if the effective date of the bill is September 1, 2009.
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:HB2583 by Hartnett (Relating to the imposition of the sales and use tax on taxable items sold or provided under certain contracts.), As Introduced
TO: Honorable Rene Oliveira, Chair, House Committee on Ways & Means
FROM: John S. O'Brien, Director, Legislative Budget Board
IN RE: HB2583 by Hartnett (Relating to the imposition of the sales and use tax on taxable items sold or provided under certain contracts.), 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
HB2583 by Hartnett (Relating to the imposition of the sales and use tax on taxable items sold or provided under certain contracts.), As Introduced
HB2583 by Hartnett (Relating to the imposition of the sales and use tax on taxable items sold or provided under certain contracts.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for HB2583, As Introduced: a negative impact of ($2,657,000) through the biennium ending August 31, 2011, if the effective date of the bill is July 1, 2009; or a negative impact of ($2,495,000) through the biennium ending August 31, 2011, if the effective date of the bill is September 1, 2009.
Estimated Two-year Net Impact to General Revenue Related Funds for HB2583, As Introduced: a negative impact of ($2,657,000) through the biennium ending August 31, 2011, if the effective date of the bill is July 1, 2009; or a negative impact of ($2,495,000) through the biennium ending August 31, 2011, if the effective date of the bill is September 1, 2009.
General Revenue-Related Funds, Six-Year Impact: Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds 2009 ($79,000) 2010 ($1,001,000) 2011 ($1,577,000) 2012 ($2,208,000) 2013 ($4,637,000) 2014 ($4,869,000)
2009 ($79,000)
2010 ($1,001,000)
2011 ($1,577,000)
2012 ($2,208,000)
2013 ($4,637,000)
2014 ($4,869,000)
General Revenue-Related Funds, Five-Year Impact: Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds 2010 ($918,000) 2011 ($1,577,000) 2012 ($2,208,000) 2013 ($4,637,000) 2014 ($4,869,000)
2010 ($918,000)
2011 ($1,577,000)
2012 ($2,208,000)
2013 ($4,637,000)
2014 ($4,869,000)
All Funds, Six-Year Impact: Fiscal Year Probable Revenue (Loss) fromGeneral Revenue Fund1 Probable Revenue (Loss) fromCities Probable Revenue (Loss) fromTransit Authorities Probable Revenue (Loss) fromCounties 2009 ($79,000) $0 $0 $0 2010 ($1,001,000) ($186,000) ($63,000) ($26,000) 2011 ($1,577,000) ($293,000) ($100,000) ($41,000) 2012 ($2,208,000) ($411,000) ($140,000) ($58,000) 2013 ($4,637,000) ($862,000) ($294,000) ($122,000) 2014 ($4,869,000) ($906,000) ($309,000) ($128,000) The above table assumes an effective date of July 1, 2009. The table below assumes an effective date of September 1, 2009 Fiscal Year Probable Revenue (Loss) fromGeneral Revenue Fund1 Probable Revenue (Loss) fromCities Probable Revenue (Loss) fromTransit Authorities Probable Revenue (Loss) fromCounties 2010 ($918,000) ($155,000) ($53,000) ($22,000) 2011 ($1,577,000) ($293,000) ($100,000) ($41,000) 2012 ($2,208,000) ($411,000) ($140,000) ($58,000) 2013 ($4,637,000) ($862,000) ($294,000) ($122,000) 2014 ($4,869,000) ($906,000) ($309,000) ($128,000) Fiscal Analysis The bill would amend Chapter 151 of the Tax Code, regarding the sales and use tax and services subject to that tax. The bill would create definitions for "destination management services," "qualified destination management company," and "qualified destination management services contract" under the sales tax. The bill would specify that a qualified destination management company is the consumer of taxable items sold under a qualified destination management services contract and the services provided under the contract are not considered taxable services under the sales tax. The bill would take effect immediately upon enactment, assuming that it received the requisite two-thirds majority votes in both houses of the Legislature. Otherwise, it would take effect September 1, 2009. Methodology Under current policy, a destination management company, as defined by the bill, is required to collect sales and use tax on the entire amount of charges to a customer related to a destination management services contract. This bill would specify that these charges would no longer be taxable. It is assumed some firms providing similar services, but not currently characterized as a destination management company, could over time restructure to take advantage of this bill's provisions. Sales of taxable destination management services were estimated based on data gathered from Comptroller tax files. Sales were multiplied by the state tax rate; adjusted for potential effective dates of July 1, 2009 and September 1, 2009; and extrapolated through fiscal 2014. Local Government Impact There would be proportional loss of sales tax revenue to units of local government. Source Agencies:304 Comptroller of Public Accounts LBB Staff: JOB, MN, SD, KK
Fiscal Year Probable Revenue (Loss) fromGeneral Revenue Fund1 Probable Revenue (Loss) fromCities Probable Revenue (Loss) fromTransit Authorities Probable Revenue (Loss) fromCounties 2009 ($79,000) $0 $0 $0 2010 ($1,001,000) ($186,000) ($63,000) ($26,000) 2011 ($1,577,000) ($293,000) ($100,000) ($41,000) 2012 ($2,208,000) ($411,000) ($140,000) ($58,000) 2013 ($4,637,000) ($862,000) ($294,000) ($122,000) 2014 ($4,869,000) ($906,000) ($309,000) ($128,000)
2009 ($79,000) $0 $0 $0
2010 ($1,001,000) ($186,000) ($63,000) ($26,000)
2011 ($1,577,000) ($293,000) ($100,000) ($41,000)
2012 ($2,208,000) ($411,000) ($140,000) ($58,000)
2013 ($4,637,000) ($862,000) ($294,000) ($122,000)
2014 ($4,869,000) ($906,000) ($309,000) ($128,000)
The above table assumes an effective date of July 1, 2009. The table below assumes an effective date of September 1, 2009
Fiscal Year Probable Revenue (Loss) fromGeneral Revenue Fund1 Probable Revenue (Loss) fromCities Probable Revenue (Loss) fromTransit Authorities Probable Revenue (Loss) fromCounties 2010 ($918,000) ($155,000) ($53,000) ($22,000) 2011 ($1,577,000) ($293,000) ($100,000) ($41,000) 2012 ($2,208,000) ($411,000) ($140,000) ($58,000) 2013 ($4,637,000) ($862,000) ($294,000) ($122,000) 2014 ($4,869,000) ($906,000) ($309,000) ($128,000) Fiscal Analysis The bill would amend Chapter 151 of the Tax Code, regarding the sales and use tax and services subject to that tax. The bill would create definitions for "destination management services," "qualified destination management company," and "qualified destination management services contract" under the sales tax. The bill would specify that a qualified destination management company is the consumer of taxable items sold under a qualified destination management services contract and the services provided under the contract are not considered taxable services under the sales tax. The bill would take effect immediately upon enactment, assuming that it received the requisite two-thirds majority votes in both houses of the Legislature. Otherwise, it would take effect September 1, 2009. Methodology Under current policy, a destination management company, as defined by the bill, is required to collect sales and use tax on the entire amount of charges to a customer related to a destination management services contract. This bill would specify that these charges would no longer be taxable. It is assumed some firms providing similar services, but not currently characterized as a destination management company, could over time restructure to take advantage of this bill's provisions. Sales of taxable destination management services were estimated based on data gathered from Comptroller tax files. Sales were multiplied by the state tax rate; adjusted for potential effective dates of July 1, 2009 and September 1, 2009; and extrapolated through fiscal 2014.
Fiscal Year Probable Revenue (Loss) fromGeneral Revenue Fund1 Probable Revenue (Loss) fromCities Probable Revenue (Loss) fromTransit Authorities Probable Revenue (Loss) fromCounties 2010 ($918,000) ($155,000) ($53,000) ($22,000) 2011 ($1,577,000) ($293,000) ($100,000) ($41,000) 2012 ($2,208,000) ($411,000) ($140,000) ($58,000) 2013 ($4,637,000) ($862,000) ($294,000) ($122,000) 2014 ($4,869,000) ($906,000) ($309,000) ($128,000)
2010 ($918,000) ($155,000) ($53,000) ($22,000)
2011 ($1,577,000) ($293,000) ($100,000) ($41,000)
2012 ($2,208,000) ($411,000) ($140,000) ($58,000)
2013 ($4,637,000) ($862,000) ($294,000) ($122,000)
2014 ($4,869,000) ($906,000) ($309,000) ($128,000)
Fiscal Analysis
The bill would amend Chapter 151 of the Tax Code, regarding the sales and use tax and services subject to that tax. The bill would create definitions for "destination management services," "qualified destination management company," and "qualified destination management services contract" under the sales tax. The bill would specify that a qualified destination management company is the consumer of taxable items sold under a qualified destination management services contract and the services provided under the contract are not considered taxable services under the sales tax. The bill would take effect immediately upon enactment, assuming that it received the requisite two-thirds majority votes in both houses of the Legislature. Otherwise, it would take effect September 1, 2009.
The bill would amend Chapter 151 of the Tax Code, regarding the sales and use tax and services subject to that tax.
The bill would take effect immediately upon enactment, assuming that it received the requisite two-thirds majority votes in both houses of the Legislature. Otherwise, it would take effect September 1, 2009.
Methodology
Under current policy, a destination management company, as defined by the bill, is required to collect sales and use tax on the entire amount of charges to a customer related to a destination management services contract. This bill would specify that these charges would no longer be taxable. It is assumed some firms providing similar services, but not currently characterized as a destination management company, could over time restructure to take advantage of this bill's provisions. Sales of taxable destination management services were estimated based on data gathered from Comptroller tax files. Sales were multiplied by the state tax rate; adjusted for potential effective dates of July 1, 2009 and September 1, 2009; and extrapolated through fiscal 2014.
Under current policy, a destination management company, as defined by the bill, is required to collect sales and use tax on the entire amount of charges to a customer related to a destination management services contract. This bill would specify that these charges would no longer be taxable. It is assumed some firms providing similar services, but not currently characterized as a destination management company, could over time restructure to take advantage of this bill's provisions.
Sales of taxable destination management services were estimated based on data gathered from Comptroller tax files. Sales were multiplied by the state tax rate; adjusted for potential effective dates of July 1, 2009 and September 1, 2009; and extrapolated through fiscal 2014.
Local Government Impact
There would be 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