LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 85TH LEGISLATIVE REGULAR SESSION March 28, 2017 TO: Honorable Dennis Bonnen, Chair, House Committee on Ways & Means FROM: Ursula Parks, Director, Legislative Budget Board IN RE:HB1052 by Schubert (Relating to the repeal of the franchise tax.), As Introduced Estimated Two-year Net Impact to General Revenue Related Funds for HB1052, As Introduced: a negative impact of ($2,994,375,000) through the biennium ending August 31, 2019. Additionally, the bill is estimated to have a direct impact of a revenue loss to the PropertyTax Relief Fund of ($924,099,000) for the 2018-19 biennium. Any loss to the Property TaxRelief Fund must be made up with an equal amount of General Revenue to fund theFoundation School Program.
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 85TH LEGISLATIVE REGULAR SESSION
March 28, 2017
TO: Honorable Dennis Bonnen, Chair, House Committee on Ways & Means FROM: Ursula Parks, Director, Legislative Budget Board IN RE:HB1052 by Schubert (Relating to the repeal of the franchise tax.), As Introduced
TO: Honorable Dennis Bonnen, Chair, House Committee on Ways & Means
FROM: Ursula Parks, Director, Legislative Budget Board
IN RE: HB1052 by Schubert (Relating to the repeal of the franchise tax.), 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
HB1052 by Schubert (Relating to the repeal of the franchise tax.), As Introduced
HB1052 by Schubert (Relating to the repeal of the franchise tax.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for HB1052, As Introduced: a negative impact of ($2,994,375,000) through the biennium ending August 31, 2019. Additionally, the bill is estimated to have a direct impact of a revenue loss to the PropertyTax Relief Fund of ($924,099,000) for the 2018-19 biennium. Any loss to the Property TaxRelief Fund must be made up with an equal amount of General Revenue to fund theFoundation School Program.
Estimated Two-year Net Impact to General Revenue Related Funds for HB1052, As Introduced: a negative impact of ($2,994,375,000) through the biennium ending August 31, 2019.
Additionally, the bill is estimated to have a direct impact of a revenue loss to the PropertyTax Relief Fund of ($924,099,000) for the 2018-19 biennium. Any loss to the Property TaxRelief Fund must be made up with an equal amount of General Revenue to fund theFoundation School Program.
General Revenue-Related Funds, Five-Year Impact: Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds 2018 $0 2019 ($2,994,375,000) 2020 ($3,069,188,000) 2021 ($3,144,384,000) 2022 ($3,222,992,000)
2018 $0
2019 ($2,994,375,000)
2020 ($3,069,188,000)
2021 ($3,144,384,000)
2022 ($3,222,992,000)
All Funds, Five-Year Impact: Fiscal Year Probable Revenue (Loss) fromGeneral Revenue Fund1 Probable Revenue (Loss) fromProperty Tax Relief Fund304 2018 $0 $0 2019 ($2,994,375,000) ($924,099,000) 2020 ($3,069,188,000) ($951,829,000) 2021 ($3,144,384,000) ($975,049,000) 2022 ($3,222,992,000) ($999,525,000)
Fiscal Year Probable Revenue (Loss) fromGeneral Revenue Fund1 Probable Revenue (Loss) fromProperty Tax Relief Fund304 2018 $0 $0 2019 ($2,994,375,000) ($924,099,000) 2020 ($3,069,188,000) ($951,829,000) 2021 ($3,144,384,000) ($975,049,000) 2022 ($3,222,992,000) ($999,525,000)
2018 $0 $0
2019 ($2,994,375,000) ($924,099,000)
2020 ($3,069,188,000) ($951,829,000)
2021 ($3,144,384,000) ($975,049,000)
2022 ($3,222,992,000) ($999,525,000)
Fiscal Analysis
The bill would repeal Chapter 171 of the Tax Code, the franchise tax, effective January 1, 2018. A taxable entity subject to the franchise tax on December 31, 2017 would be required to file a final franchise tax report and pay a transitional tax on or before May 15, 2018. The transitional tax is equal to the tax the taxable entity would have paid in 2018 if the franchise tax had not been repealed. The franchise tax provisions in effect on December 31, 2017 relating to the computation and payment of the tax would remain in effect for the transitional tax. Administrative and legal provisions of Chapter 171, and Subtitle B of Title 2 of the Tax Code, would remain in effect until barred by limitations. The bill would take effect on January 1, 2018.
Methodology
The estimated fiscal impact is based on the Comptroller's 2018-19 Biennial Revenue Estimate.As drafted, the saving provisions in this bill do not include retaining Section 171.206 which provides confidentiality for roughly four million franchise tax reports and related records. If all existing franchise tax records become public, we anticipate considerable public interest in obtaining this previously unavailable information which would require additional staff to support our Open Records Division. If the franchise tax records remain confidential, there would be no administrative costs to the Comptroller's Office.
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