LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 82ND LEGISLATIVE REGULAR SESSION March 20, 2011 TO: Honorable Harvey Hilderbran, Chair, House Committee on Ways & Means FROM: John S O'Brien, Director, Legislative Budget Board IN RE:HB2547 by Zerwas (Relating to the definition of little cigars and tobacco products tax on little cigars.), As Introduced Estimated Two-year Net Impact to General Revenue Related Funds for HB2547, As Introduced: a negative impact of ($30,158,000) through the biennium ending August 31, 2013. Additionally, the bill will have a direct impact of a revenue gain to the Property Tax Relief Fund of$55,264,000 for the 2012-13 biennium. Any gain to the Property Tax Relief Fund will free up General Revenue of the same amount.
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 82ND LEGISLATIVE REGULAR SESSION
March 20, 2011
TO: Honorable Harvey Hilderbran, Chair, House Committee on Ways & Means FROM: John S O'Brien, Director, Legislative Budget Board IN RE:HB2547 by Zerwas (Relating to the definition of little cigars and tobacco products tax on little cigars.), As Introduced
TO: Honorable Harvey Hilderbran, Chair, House Committee on Ways & Means
FROM: John S O'Brien, Director, Legislative Budget Board
IN RE: HB2547 by Zerwas (Relating to the definition of little cigars and tobacco products tax on little cigars.), As Introduced
Honorable Harvey Hilderbran, Chair, House Committee on Ways & Means
Honorable Harvey Hilderbran, Chair, House Committee on Ways & Means
John S O'Brien, Director, Legislative Budget Board
John S O'Brien, Director, Legislative Budget Board
HB2547 by Zerwas (Relating to the definition of little cigars and tobacco products tax on little cigars.), As Introduced
HB2547 by Zerwas (Relating to the definition of little cigars and tobacco products tax on little cigars.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for HB2547, As Introduced: a negative impact of ($30,158,000) through the biennium ending August 31, 2013. Additionally, the bill will have a direct impact of a revenue gain to the Property Tax Relief Fund of$55,264,000 for the 2012-13 biennium. Any gain to the Property Tax Relief Fund will free up General Revenue of the same amount.
Estimated Two-year Net Impact to General Revenue Related Funds for HB2547, As Introduced: a negative impact of ($30,158,000) through the biennium ending August 31, 2013.
Additionally, the bill will have a direct impact of a revenue gain to the Property Tax Relief Fund of$55,264,000 for the 2012-13 biennium. Any gain to the Property Tax Relief Fund will free up General Revenue of the same amount.
General Revenue-Related Funds, Five-Year Impact: Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds 2012 ($14,561,000) 2013 ($15,597,000) 2014 ($16,706,000) 2015 ($17,893,000) 2016 ($19,166,000)
2012 ($14,561,000)
2013 ($15,597,000)
2014 ($16,706,000)
2015 ($17,893,000)
2016 ($19,166,000)
All Funds, Five-Year Impact: Fiscal Year Probable Revenue Gain/(Loss) fromGeneral Revenue Fund1 Probable Revenue Gain/(Loss) fromProperty Tax Relief Fund304 2012 ($14,561,000) $26,293,000 2013 ($15,597,000) $28,971,000 2014 ($16,706,000) $29,412,000 2015 ($17,893,000) $29,963,000 2016 ($19,166,000) $30,633,000
Fiscal Year Probable Revenue Gain/(Loss) fromGeneral Revenue Fund1 Probable Revenue Gain/(Loss) fromProperty Tax Relief Fund304 2012 ($14,561,000) $26,293,000 2013 ($15,597,000) $28,971,000 2014 ($16,706,000) $29,412,000 2015 ($17,893,000) $29,963,000 2016 ($19,166,000) $30,633,000
2012 ($14,561,000) $26,293,000
2013 ($15,597,000) $28,971,000
2014 ($16,706,000) $29,412,000
2015 ($17,893,000) $29,963,000
2016 ($19,166,000) $30,633,000
Fiscal Analysis
The bill would amend Chapter 155 of the Tax Code, regarding cigars and tobacco products taxes. The bill would add a definition for a little cigar to mean a roll for smoking made wholly or in part of tobacco if it uses a cellulose acetate or similar filter and is wrapped in any substance containing tobacco, other than natural leaf tobacco. The bill would remove weight as a determinant of the tax rate for any cigar. The bill would set the tax rate on a little cigar to the same rate imposed on a cigarette under Section 154.021(b) of the Tax Code. The bill would take effect September 1, 2011.
Methodology
The bill's changes for little cigars would significantly increase their tax ratefrom the current 2 or 15 cents per pack to $1.41 per packand this will result in a reduction of taxable consumption in Texas. In addition, the efforts by state and federal governments to reduce Internet cigarette sales that avoid state taxation generally do not apply to cigars, and this analysis assumed some consumers will use the Internet to purchase cigars. First year revenue collections were adjusted for collections lags. The bill adds a new subsection to Section 155.021 of the Tax Code, regarding the tax imposed on cigars, to deposit revenue from the fee imposed in this section to Property Tax Relief Fund 0304. This analysis assumes the new subsection refers to the various tax rates imposed on cigars. Under Section 155.241 of this Code, all revenue collected from cigar taxes is deposited to General Revenue Fund 0001, and therefore the new subsection would result in a loss to Fund 0001.
The bill's changes for little cigars would significantly increase their tax ratefrom the current 2 or 15 cents per pack to $1.41 per packand this will result in a reduction of taxable consumption in Texas. In addition, the efforts by state and federal governments to reduce Internet cigarette sales that avoid state taxation generally do not apply to cigars, and this analysis assumed some consumers will use the Internet to purchase cigars. First year revenue collections were adjusted for collections lags.
The bill adds a new subsection to Section 155.021 of the Tax Code, regarding the tax imposed on cigars, to deposit revenue from the fee imposed in this section to Property Tax Relief Fund 0304. This analysis assumes the new subsection refers to the various tax rates imposed on cigars. Under Section 155.241 of this Code, all revenue collected from cigar taxes is deposited to General Revenue Fund 0001, and therefore the new subsection would result in a loss to Fund 0001.
Local Government Impact
No significant fiscal implication to units of local government is anticipated.
Source Agencies: 304 Comptroller of Public Accounts
304 Comptroller of Public Accounts
LBB Staff: JOB, KK, AG
JOB, KK, AG