LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 83RD LEGISLATIVE REGULAR SESSION March 13, 2013 TO: Honorable Tommy Williams, Chair, Senate Committee On Finance FROM: Ursula Parks, Director, Legislative Budget Board IN RE:SB539 by Paxton (Relating to the classification of certain entities as primarily engaged in retail trade for purposes of the franchise tax.), As Introduced Estimated Two-year Net Impact to General Revenue Related Funds for SB539, 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 ($5,411,000) 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 13, 2013
TO: Honorable Tommy Williams, Chair, Senate Committee On Finance FROM: Ursula Parks, Director, Legislative Budget Board IN RE:SB539 by Paxton (Relating to the classification of certain entities as primarily engaged in retail trade for purposes of the franchise tax.), As Introduced
TO: Honorable Tommy Williams, Chair, Senate Committee On Finance
FROM: Ursula Parks, Director, Legislative Budget Board
IN RE: SB539 by Paxton (Relating to the classification of certain entities as primarily engaged in retail trade for purposes of the franchise tax.), As Introduced
Honorable Tommy Williams, Chair, Senate Committee On Finance
Honorable Tommy Williams, Chair, Senate Committee On Finance
Ursula Parks, Director, Legislative Budget Board
Ursula Parks, Director, Legislative Budget Board
SB539 by Paxton (Relating to the classification of certain entities as primarily engaged in retail trade for purposes of the franchise tax.), As Introduced
SB539 by Paxton (Relating to the classification of certain entities as primarily engaged in retail trade for purposes of the franchise tax.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for SB539, 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 ($5,411,000) 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 SB539, 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 ($5,411,000) 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.
Additionally, the bill will have a direct impact of a revenue loss to the Property Tax Relief Fund of ($5,411,000) 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 ($2,700,000) 2015 ($2,711,000) 2016 ($2,762,000) 2017 ($2,713,000) 2018 ($2,691,000)
Fiscal Year Probable Revenue (Loss) fromProperty Tax Relief Fund304 2014 ($2,700,000) 2015 ($2,711,000) 2016 ($2,762,000) 2017 ($2,713,000) 2018 ($2,691,000)
2014 ($2,700,000)
2015 ($2,711,000)
2016 ($2,762,000)
2017 ($2,713,000)
2018 ($2,691,000)
Fiscal Analysis
The bill would amend Chapter 171 of the Tax Code, regarding the franchise tax, by adding a provision to the definition of "retail trade" in Section 171.0001. The added provision would expand the definition to include "rental-purchase agreement activities regulated by Chapter 92, Business and Commerce Code." Chapter 92 of the Business and Commerce Code, titled "Rental-Purchase Agreements," contains provisions specifying certain requirements for rental-purchase agreements between merchants and consumers. The bill would take effect January 1, 2014, and apply to reports due on or after that date.
Methodology
Under current law a taxable entity primarily engaged in renting personal property to consumers is considered to not be engaged in retail trade, and the entity would calculate franchise tax liability based on a tax rate of 1 percent. The bill would allow those entities to calculate franchise tax liability based on a 0.5 percent tax rate. The estimated fiscal impact is based on data in the Comptroller's franchise tax files and research on companies engaged in rental-purchase activities with consumers.
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