LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 83RD LEGISLATIVE REGULAR SESSION April 29, 2013 TO: Honorable Harvey Hilderbran, Chair, House Committee on Ways & Means FROM: Ursula Parks, Director, Legislative Budget Board IN RE:HB510 by Murphy (relating to the computation of the franchise tax by taxable entities that rent or lease certain equipment and other items.), Committee Report 1st House, Substituted Estimated Two-year Net Impact to General Revenue Related Funds for HB510, Committee Report 1st House, Substituted: 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 ($8,548,000) 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
April 29, 2013
TO: Honorable Harvey Hilderbran, Chair, House Committee on Ways & Means FROM: Ursula Parks, Director, Legislative Budget Board IN RE:HB510 by Murphy (relating to the computation of the franchise tax by taxable entities that rent or lease certain equipment and other items.), Committee Report 1st House, Substituted
TO: Honorable Harvey Hilderbran, Chair, House Committee on Ways & Means
FROM: Ursula Parks, Director, Legislative Budget Board
IN RE: HB510 by Murphy (relating to the computation of the franchise tax by taxable entities that rent or lease certain equipment and other items.), Committee Report 1st House, Substituted
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
HB510 by Murphy (relating to the computation of the franchise tax by taxable entities that rent or lease certain equipment and other items.), Committee Report 1st House, Substituted
HB510 by Murphy (relating to the computation of the franchise tax by taxable entities that rent or lease certain equipment and other items.), Committee Report 1st House, Substituted
Estimated Two-year Net Impact to General Revenue Related Funds for HB510, Committee Report 1st House, Substituted: 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 ($8,548,000) 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 HB510, Committee Report 1st House, Substituted: 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 ($8,548,000) 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 ($4,265,000) 2015 ($4,283,000) 2016 ($4,363,000) 2017 ($4,286,000) 2018 ($4,251,000)
Fiscal Year Probable Revenue (Loss) fromProperty Tax Relief Fund304 2014 ($4,265,000) 2015 ($4,283,000) 2016 ($4,363,000) 2017 ($4,286,000) 2018 ($4,251,000)
2014 ($4,265,000)
2015 ($4,283,000)
2016 ($4,363,000)
2017 ($4,286,000)
2018 ($4,251,000)
Fiscal Analysis
This bill would amend Chapter 171 of the Tax Code, regarding the franchise tax, by adding to the definition of "retail trade." The additions would include activities involving the rental or leasing of tools, party and event supplies, and furniture that are classified as Industry 7359 in the 1987 Standard Industrial Classification Manual. The bill also would add heavy construction equipment rental or leasing activities classified as Industry 7353 in the 1987 Standard Industrial Classification Manual to the definition of retail trade. The bill would take effect on January 1, 2014, and apply to reports due on or after that date.
Methodology
The bill would provide that taxable entities in the rental or leasing businesses addressed by the bill calculate franchise tax liability by applying a tax rate of 0.5 percent to taxable margin. Under current law the applicable tax rate is 1.0 percent. The estimated fiscal impact is based on the franchise tax return information for taxable entities in industries affected by the bill.
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