LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 81ST LEGISLATIVE REGULAR SESSION April 19, 2009 TO: Honorable Rene Oliveira, Chair, House Committee on Ways & Means FROM: John S. O'Brien, Director, Legislative Budget Board IN RE:HB3909 by Madden (Relating to the computation of the franchise tax.), As Introduced The bill will have a direct impact of a revenue loss to the Property Tax Relief Fund of $32,166,000 for the 2010-11 biennium. Any loss to the Property Tax Relief Fund will have to be made up with General Revenue of the same amount to fund property tax relief.
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 81ST LEGISLATIVE REGULAR SESSION
April 19, 2009
TO: Honorable Rene Oliveira, Chair, House Committee on Ways & Means FROM: John S. O'Brien, Director, Legislative Budget Board IN RE:HB3909 by Madden (Relating to the computation of the franchise tax.), As Introduced
TO: Honorable Rene Oliveira, Chair, House Committee on Ways & Means
FROM: John S. O'Brien, Director, Legislative Budget Board
IN RE: HB3909 by Madden (Relating to the computation of the franchise 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
HB3909 by Madden (Relating to the computation of the franchise tax.), As Introduced
HB3909 by Madden (Relating to the computation of the franchise tax.), As Introduced
The bill will have a direct impact of a revenue loss to the Property Tax Relief Fund of $32,166,000 for the 2010-11 biennium. Any loss to the Property Tax Relief Fund will have to be made up with General Revenue of the same amount to fund property tax relief.
The bill will have a direct impact of a revenue loss to the Property Tax Relief Fund of $32,166,000 for the 2010-11 biennium. Any loss to the Property Tax Relief Fund will have to be made up with General Revenue of the same amount to fund property tax relief.
General Revenue-Related Funds, Five-Year Impact: Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds 2010 $0 2011 $0 2012 $0 2013 $0 2014 $0
2010 $0
2011 $0
2012 $0
2013 $0
2014 $0
All Funds, Five-Year Impact: Fiscal Year Probable Revenue Gain/(Loss) fromProperty Tax Relief Fund304 2010 ($15,884,000) 2011 ($16,282,000) 2012 ($16,852,000) 2013 ($17,526,000) 2014 ($18,227,000)
Fiscal Year Probable Revenue Gain/(Loss) fromProperty Tax Relief Fund304 2010 ($15,884,000) 2011 ($16,282,000) 2012 ($16,852,000) 2013 ($17,526,000) 2014 ($18,227,000)
2010 ($15,884,000)
2011 ($16,282,000)
2012 ($16,852,000)
2013 ($17,526,000)
2014 ($18,227,000)
Fiscal Analysis
The bill would amend Chapter 171 of the Tax Code, regarding the franchise tax, by adding a provision relating to taxable entities primarily engaged in retail or wholesale trade.
Methodology
Under current law, a taxable entity primarily engaged in retail or wholesale trade must derive less than 50 percent of total revenue from the sale of products it produces or products produced by a member of a taxable entity's affiliated group. Current law contains an exception for the total revenue from activities of eating and drinking places (Major Group 58 of the Standard Industrial Classification Manual). The bill would add a similarly worded exception for total revenue in activities in a trade that rents or leases tangible personal property as described by Industry Group 735 of the Standard Industrial Classification Manual (miscellaneous equipment rental and leasing). The estimated fiscal impact of the is based on taxable entities in Industry Group 735 calculated such that tax would be paid at a rate of one-half of one percent. Note: This analysis assumes the bill's language applies the one-half percent rate to Industry Group 735. However, if the provisions were to apply to a larger group of firms (i.e., all revenue from a trade that, in the course of their business activities, rents of leases the kind of tangible personal property rented or leased by firms in Industry Group 735) then the fiscal impact could be higher.
Under current law, a taxable entity primarily engaged in retail or wholesale trade must derive less than 50 percent of total revenue from the sale of products it produces or products produced by a member of a taxable entity's affiliated group. Current law contains an exception for the total revenue from activities of eating and drinking places (Major Group 58 of the Standard Industrial Classification Manual). The bill would add a similarly worded exception for total revenue in activities in a trade that rents or leases tangible personal property as described by Industry Group 735 of the Standard Industrial Classification Manual (miscellaneous equipment rental and leasing).
The estimated fiscal impact of the is based on taxable entities in Industry Group 735 calculated such that tax would be paid at a rate of one-half of one percent.
Note: This analysis assumes the bill's language applies the one-half percent rate to Industry Group 735. However, if the provisions were to apply to a larger group of firms (i.e., all revenue from a trade that, in the course of their business activities, rents of leases the kind of tangible personal property rented or leased by firms in Industry Group 735) then the fiscal impact could be higher.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies: 304 Comptroller of Public Accounts
304 Comptroller of Public Accounts
LBB Staff: JOB, MN, SD, SM
JOB, MN, SD, SM