LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 84TH LEGISLATIVE REGULAR SESSION April 20, 2015 TO: Honorable Dennis Bonnen, Chair, House Committee on Ways & Means FROM: Ursula Parks, Director, Legislative Budget Board IN RE:HB3174 by Button (Relating to the application of the sales and use tax to certain computer program transactions.), As Introduced Estimated Two-year Net Impact to General Revenue Related Funds for HB3174, As Introduced: a negative impact of ($103,700,000) through the biennium ending August 31, 2017, if the effective date of the bill is June 1, 2015; or a negative impact of ($92,900,000) through the biennium ending August 31, 2017, if the effective date of the bill is September 1, 2015.
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 84TH LEGISLATIVE REGULAR SESSION
April 20, 2015
TO: Honorable Dennis Bonnen, Chair, House Committee on Ways & Means FROM: Ursula Parks, Director, Legislative Budget Board IN RE:HB3174 by Button (Relating to the application of the sales and use tax to certain computer program transactions.), As Introduced
TO: Honorable Dennis Bonnen, Chair, House Committee on Ways & Means
FROM: Ursula Parks, Director, Legislative Budget Board
IN RE: HB3174 by Button (Relating to the application of the sales and use tax to certain computer program transactions.), As Introduced
Honorable Dennis Bonnen, Chair, House Committee on Ways & Means
Honorable Dennis Bonnen, Chair, House Committee on Ways & Means
Ursula Parks, Director, Legislative Budget Board
Ursula Parks, Director, Legislative Budget Board
HB3174 by Button (Relating to the application of the sales and use tax to certain computer program transactions.), As Introduced
HB3174 by Button (Relating to the application of the sales and use tax to certain computer program transactions.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for HB3174, As Introduced: a negative impact of ($103,700,000) through the biennium ending August 31, 2017, if the effective date of the bill is June 1, 2015; or a negative impact of ($92,900,000) through the biennium ending August 31, 2017, if the effective date of the bill is September 1, 2015.
Estimated Two-year Net Impact to General Revenue Related Funds for HB3174, As Introduced: a negative impact of ($103,700,000) through the biennium ending August 31, 2017, if the effective date of the bill is June 1, 2015; or a negative impact of ($92,900,000) through the biennium ending August 31, 2017, if the effective date of the bill is September 1, 2015.
General Revenue-Related Funds, Six-Year Impact: Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds 2015 ($8,900,000) 2016 ($45,700,000) 2017 ($49,100,000) 2018 ($52,800,000) 2019 ($56,800,000) 2020 ($61,000,000)
2015 ($8,900,000)
2016 ($45,700,000)
2017 ($49,100,000)
2018 ($52,800,000)
2019 ($56,800,000)
2020 ($61,000,000)
General Revenue-Related Funds, Five-Year Impact: Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds 2016 ($43,800,000) 2017 ($49,100,000) 2018 ($52,800,000) 2019 ($56,800,000) 2020 ($61,000,000)
2016 ($43,800,000)
2017 ($49,100,000)
2018 ($52,800,000)
2019 ($56,800,000)
2020 ($61,000,000)
All Funds, Six-Year Impact: Fiscal Year Probable Revenue (Loss) fromGeneral Revenue Fund1 Probable Revenue (Loss) fromCities Probable Revenue (Loss) fromTransit Authorities Probable Revenue (Loss) fromCounties and Special Districts 2015 ($8,900,000) ($1,600,000) ($600,000) ($300,000) 2016 ($45,700,000) ($8,400,000) ($2,900,000) ($1,500,000) 2017 ($49,100,000) ($9,100,000) ($3,100,000) ($1,700,000) 2018 ($52,800,000) ($9,700,000) ($3,300,000) ($1,800,000) 2019 ($56,800,000) ($10,500,000) ($3,600,000) ($1,900,000) 2020 ($61,000,000) ($11,200,000) ($3,900,000) ($2,100,000) The above table assumes the bill takes effect June 1st, 2015. The table below assumes the bill takes effect September 1st, 2015. Fiscal Year Probable Revenue (Loss) fromGeneral Revenue Fund1 Probable Revenue (Loss) fromCities Probable Revenue (Loss) fromTransit Authorities Probable Revenue (Loss) fromCounties and Special Districts 2016 ($43,800,000) ($8,100,000) ($2,800,000) ($1,500,000) 2017 ($49,100,000) ($9,100,000) ($3,100,000) ($1,700,000) 2018 ($52,800,000) ($9,700,000) ($3,300,000) ($1,800,000) 2019 ($56,800,000) ($10,500,000) ($3,600,000) ($1,900,000) 2020 ($61,000,000) ($11,200,000) ($3,900,000) ($2,100,000) Fiscal Analysis The bill would amend Chapter 151 of the Tax Code, regarding sales and use taxation of certain computer program transactions. The bill would add a new Subsection (d) to Section 151.006 to provide that a sale for resale includes a sale of a computer program to a provider of Internet hosting services who sells the right to use the program to an unrelated user of Internet hosting services. A sale for resale is exempt from tax. The bill would take effect immediately upon enactment, assuming that it received the requisite two-thirds majority votes in both houses of the Legislature. Otherwise, it would take effect September 1, 2015. Methodology Data from the U.S. Census Bureau on national and state sales of the data processing, hosting, and related services industry and on national expenditures on computer software by that industry were used to estimate software expenditures in the state that likely would be exempted by the bill. The estimate was multiplied by the state sales tax rate and extrapolated through the forecast period. The implications for units of local government were estimated proportionally. Local Government Impact There would be a proportional loss of sales and use tax revenue from local taxing jurisdictions. Source Agencies:304 Comptroller of Public Accounts LBB Staff: UP, KK, SD
Fiscal Year Probable Revenue (Loss) fromGeneral Revenue Fund1 Probable Revenue (Loss) fromCities Probable Revenue (Loss) fromTransit Authorities Probable Revenue (Loss) fromCounties and Special Districts 2015 ($8,900,000) ($1,600,000) ($600,000) ($300,000) 2016 ($45,700,000) ($8,400,000) ($2,900,000) ($1,500,000) 2017 ($49,100,000) ($9,100,000) ($3,100,000) ($1,700,000) 2018 ($52,800,000) ($9,700,000) ($3,300,000) ($1,800,000) 2019 ($56,800,000) ($10,500,000) ($3,600,000) ($1,900,000) 2020 ($61,000,000) ($11,200,000) ($3,900,000) ($2,100,000)
2015 ($8,900,000) ($1,600,000) ($600,000) ($300,000)
2016 ($45,700,000) ($8,400,000) ($2,900,000) ($1,500,000)
2017 ($49,100,000) ($9,100,000) ($3,100,000) ($1,700,000)
2018 ($52,800,000) ($9,700,000) ($3,300,000) ($1,800,000)
2019 ($56,800,000) ($10,500,000) ($3,600,000) ($1,900,000)
2020 ($61,000,000) ($11,200,000) ($3,900,000) ($2,100,000)
The above table assumes the bill takes effect June 1st, 2015. The table below assumes the bill takes effect September 1st, 2015.
Fiscal Year Probable Revenue (Loss) fromGeneral Revenue Fund1 Probable Revenue (Loss) fromCities Probable Revenue (Loss) fromTransit Authorities Probable Revenue (Loss) fromCounties and Special Districts 2016 ($43,800,000) ($8,100,000) ($2,800,000) ($1,500,000) 2017 ($49,100,000) ($9,100,000) ($3,100,000) ($1,700,000) 2018 ($52,800,000) ($9,700,000) ($3,300,000) ($1,800,000) 2019 ($56,800,000) ($10,500,000) ($3,600,000) ($1,900,000) 2020 ($61,000,000) ($11,200,000) ($3,900,000) ($2,100,000) Fiscal Analysis The bill would amend Chapter 151 of the Tax Code, regarding sales and use taxation of certain computer program transactions. The bill would add a new Subsection (d) to Section 151.006 to provide that a sale for resale includes a sale of a computer program to a provider of Internet hosting services who sells the right to use the program to an unrelated user of Internet hosting services. A sale for resale is exempt from tax. The bill would take effect immediately upon enactment, assuming that it received the requisite two-thirds majority votes in both houses of the Legislature. Otherwise, it would take effect September 1, 2015. Methodology Data from the U.S. Census Bureau on national and state sales of the data processing, hosting, and related services industry and on national expenditures on computer software by that industry were used to estimate software expenditures in the state that likely would be exempted by the bill. The estimate was multiplied by the state sales tax rate and extrapolated through the forecast period. The implications for units of local government were estimated proportionally.
Fiscal Year Probable Revenue (Loss) fromGeneral Revenue Fund1 Probable Revenue (Loss) fromCities Probable Revenue (Loss) fromTransit Authorities Probable Revenue (Loss) fromCounties and Special Districts 2016 ($43,800,000) ($8,100,000) ($2,800,000) ($1,500,000) 2017 ($49,100,000) ($9,100,000) ($3,100,000) ($1,700,000) 2018 ($52,800,000) ($9,700,000) ($3,300,000) ($1,800,000) 2019 ($56,800,000) ($10,500,000) ($3,600,000) ($1,900,000) 2020 ($61,000,000) ($11,200,000) ($3,900,000) ($2,100,000)
2016 ($43,800,000) ($8,100,000) ($2,800,000) ($1,500,000)
2017 ($49,100,000) ($9,100,000) ($3,100,000) ($1,700,000)
2018 ($52,800,000) ($9,700,000) ($3,300,000) ($1,800,000)
2019 ($56,800,000) ($10,500,000) ($3,600,000) ($1,900,000)
2020 ($61,000,000) ($11,200,000) ($3,900,000) ($2,100,000)
Fiscal Analysis
The bill would amend Chapter 151 of the Tax Code, regarding sales and use taxation of certain computer program transactions. The bill would add a new Subsection (d) to Section 151.006 to provide that a sale for resale includes a sale of a computer program to a provider of Internet hosting services who sells the right to use the program to an unrelated user of Internet hosting services. A sale for resale is exempt from tax. The bill would take effect immediately upon enactment, assuming that it received the requisite two-thirds majority votes in both houses of the Legislature. Otherwise, it would take effect September 1, 2015.
Methodology
Data from the U.S. Census Bureau on national and state sales of the data processing, hosting, and related services industry and on national expenditures on computer software by that industry were used to estimate software expenditures in the state that likely would be exempted by the bill. The estimate was multiplied by the state sales tax rate and extrapolated through the forecast period. The implications for units of local government were estimated proportionally.
Local Government Impact
There would be a proportional loss of sales and use tax revenue from local taxing jurisdictions.
Source Agencies: 304 Comptroller of Public Accounts
304 Comptroller of Public Accounts
LBB Staff: UP, KK, SD
UP, KK, SD