LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 83RD LEGISLATIVE REGULAR SESSION March 24, 2013 TO: Honorable Harvey Hilderbran, Chair, House Committee on Ways & Means FROM: Ursula Parks, Director, Legislative Budget Board IN RE:HB1432 by White (Relating to the computation of cost of goods sold for purposes of the franchise tax by taxable entities primarily engaged in the business of harvesting trees for wood.), As Introduced Estimated Two-year Net Impact to General Revenue Related Funds for HB1432, As Introduced: an impact of $0 through the biennium ending August 31, 2015. Additionally, the bill will have a direct impact of a revenue loss to the Property Tax Relief Fund of ($4,050,000) for the 2014-15 biennium. Any loss to the Property Tax Relief Fund must be made up with an equal amount of General Revenue to fund the Foundation School Program.
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 83RD LEGISLATIVE REGULAR SESSION
March 24, 2013
TO: Honorable Harvey Hilderbran, Chair, House Committee on Ways & Means FROM: Ursula Parks, Director, Legislative Budget Board IN RE:HB1432 by White (Relating to the computation of cost of goods sold for purposes of the franchise tax by taxable entities primarily engaged in the business of harvesting trees for wood.), As Introduced
TO: Honorable Harvey Hilderbran, Chair, House Committee on Ways & Means
FROM: Ursula Parks, Director, Legislative Budget Board
IN RE: HB1432 by White (Relating to the computation of cost of goods sold for purposes of the franchise tax by taxable entities primarily engaged in the business of harvesting trees for wood.), As Introduced
Honorable Harvey Hilderbran, Chair, House Committee on Ways & Means
Honorable Harvey Hilderbran, Chair, House Committee on Ways & Means
Ursula Parks, Director, Legislative Budget Board
Ursula Parks, Director, Legislative Budget Board
HB1432 by White (Relating to the computation of cost of goods sold for purposes of the franchise tax by taxable entities primarily engaged in the business of harvesting trees for wood.), As Introduced
HB1432 by White (Relating to the computation of cost of goods sold for purposes of the franchise tax by taxable entities primarily engaged in the business of harvesting trees for wood.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for HB1432, As Introduced: an impact of $0 through the biennium ending August 31, 2015. Additionally, the bill will have a direct impact of a revenue loss to the Property Tax Relief Fund of ($4,050,000) for the 2014-15 biennium. Any loss to the Property Tax Relief Fund must be made up with an equal amount of General Revenue to fund the Foundation School Program.
Estimated Two-year Net Impact to General Revenue Related Funds for HB1432, As Introduced: an impact of $0 through the biennium ending August 31, 2015.
Additionally, the bill will have a direct impact of a revenue loss to the Property Tax Relief Fund of ($4,050,000) for the 2014-15 biennium. Any loss to the Property Tax Relief Fund must be made up with an equal amount of General Revenue to fund the Foundation School Program.
General Revenue-Related Funds, Five-Year Impact: Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds 2014 $0 2015 $0 2016 $0 2017 $0 2018 $0
2014 $0
2015 $0
2016 $0
2017 $0
2018 $0
All Funds, Five-Year Impact: Fiscal Year Probable Revenue (Loss) fromProperty Tax Relief Fund304 2014 ($2,000,000) 2015 ($2,050,000) 2016 ($2,100,000) 2017 ($2,150,000) 2018 ($2,200,000)
Fiscal Year Probable Revenue (Loss) fromProperty Tax Relief Fund304 2014 ($2,000,000) 2015 ($2,050,000) 2016 ($2,100,000) 2017 ($2,150,000) 2018 ($2,200,000)
2014 ($2,000,000)
2015 ($2,050,000)
2016 ($2,100,000)
2017 ($2,150,000)
2018 ($2,200,000)
Fiscal Analysis
The bill would amend Chapter 171 of the Tax Code, regarding the franchise tax, to allow taxable entities primarily engaged in the business of harvesting trees for wood to subtract certain costs as cost of goods sold in calculating taxable margin for the franchise tax. The bill would provide that the subtractions would be allowed notwithstanding Section 171.1012(i) which requires a taxable entity to own the goods for which a cost of goods sold subtraction is taken. The subtraction would be for the specified direct costs of acquiring or producing the timber for wood regardless of whether the taxable entity owns the land from which the trees are harvested, the harvested timber, or the wood resulting from the harvested timber. The specified costs would include: 1. moving harvesting equipment; 2. severing timber; 3. transporting timber; 4. obtaining, using, storing, or maintaining necessary equipment; and 5. other supplies, labor, freight, and fuel necessary to accomplish 1, 2, or 3. The bill would take effect on January 1, 2014, and apply to reports due on or after that date.
The bill would amend Chapter 171 of the Tax Code, regarding the franchise tax, to allow taxable entities primarily engaged in the business of harvesting trees for wood to subtract certain costs as cost of goods sold in calculating taxable margin for the franchise tax. The bill would provide that the subtractions would be allowed notwithstanding Section 171.1012(i) which requires a taxable entity to own the goods for which a cost of goods sold subtraction is taken. The subtraction would be for the specified direct costs of acquiring or producing the timber for wood regardless of whether the taxable entity owns the land from which the trees are harvested, the harvested timber, or the wood resulting from the harvested timber. The specified costs would include:
1. moving harvesting equipment; 2. severing timber; 3. transporting timber; 4. obtaining, using, storing, or maintaining necessary equipment; and 5. other supplies, labor, freight, and fuel necessary to accomplish 1, 2, or 3. The bill would take effect on January 1, 2014, and apply to reports due on or after that date.
Methodology
The estimated fiscal impact is based on information in the Comptroller's franchise tax databases for taxable entities in the timber and logging industry.
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: UP, KK, SD
UP, KK, SD