Texas House Bill HB1675

Texas 2015 - 84th Regular

Caption

Relating to increasing the period of time for exempting freeport goods from ad valorem taxation.

Impact

The impact of HB 1675 on state laws is significant, particularly in how it addresses property tax regulations concerning businesses engaged in the trade of goods. By extending the exemption period, the bill aims to align Texas's tax policies with those of other states that have similarly favorable conditions for businesses dealing in manufacturing and logistics. The intent is to stimulate business operations within Texas, thereby maintaining and potentially increasing job creation and economic activity in the state. Proponents argue that such tax incentives will encourage businesses to invest further in Texas infrastructure and activities.

Summary

House Bill 1675 focuses on modifying the exemption period for 'freeport goods' from ad valorem taxation. Specifically, it proposes to extend the period for which certain tangible personal property declared as freeport goods can be exempt from property tax. Under current Texas law, goods that are assembled, manufactured, or processed in Texas and are intended for transport out of state within a specific timeframe can be exempted; this bill seeks to increase that time frame from 175 days to 365 days. The motivation behind this amendment is to enhance Texas's competitive edge in attracting businesses and fostering economic growth by making it more appealing for companies to operate in the state.

Contention

However, the bill has generated notable points of contention. Critics argue that extending the exemption period could erode local government tax revenues as they may become overly reliant on property taxes from other sectors. The switch from 175 days to a full year means that local entities might struggle to replace or make up for the lost revenue during that extended period when property can be held tax-free. Additionally, there are concerns about fairness, with opponents claiming that this policy primarily benefits larger corporations, potentially leading to a disadvantage for smaller local businesses that may not take advantage of such exemptions.