Texas 2021 - 87th 1st C.S.

Texas House Bill HB304 Compare Versions

Only one version of the bill is available at this time.

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1	1	By: White H.B. No. 304
2	2
3	3
4	4	A BILL TO BE ENTITLED
5	5	AN ACT
6	6	relating to the repeal of or limitations on certain state and local
7	7	taxes, including school district maintenance and operations ad
8	8	valorem taxes, the enactment of state and local value added taxes,
9	9	and related school finance and administration reform; imposing
10	10	taxes.
11	11	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
12	12	ARTICLE 1. STATE VALUE ADDED TAX
13	13	SECTION 1.01. DEFINITIONS. In this article:
14	14	(1) "Input tax" means the aggregate amount of all
15	15	state and local value added taxes imposed under this Act that have
16	16	accrued with respect to services and property supplied to a
17	17	taxpayer during a calendar quarter and used or held for use by the
18	18	taxpayer in the ordinary course of the taxpayer's trade or
19	19	business.
20	20	(2) "Output tax" means the aggregate amount of all
21	21	state and local value added taxes imposed under this Act that have
22	22	accrued with respect to services and property supplied by a
23	23	taxpayer during a calendar quarter in the ordinary course of the
24	24	taxpayer's trade or business.
25	25	(3) "Taxpayer" means a person on whom the value added
26	26	tax is imposed.
27	27	(4) "Value added tax" means the tax imposed under
28	28	Section 1.02 of this article.
29	29	SECTION 1.02. VALUE ADDED TAX IMPOSED. A value added tax is
30	30	imposed on each person in this state who supplies any service or
31	31	property in the ordinary course of a trade or business in which the
32	32	person engages for profit.
33	33	SECTION 1.03. RATE OF TAX. The rate of the value added tax
34	34	is 6.72 percent of the taxpayer's taxable receipts from the supply
35	35	of services or property.
36	36	SECTION 1.04. DETERMINATION OF TAX PAYABLE. The total
37	37	amount of state and local value added taxes under this Act payable
38	38	by a taxpayer for a calendar quarter is the amount, if any, by which
39	39	the taxpayer's output tax exceeds the taxpayer's input tax.
40	40	SECTION 1.05. EXEMPTIONS. (a) The comptroller by rule
41	41	shall exempt from the value added tax:
42	42	(1) small businesses;
43	43	(2) governmental entities; and
44	44	(3) religious, educational, and public service
45	45	organizations.
46	46	(b) The comptroller shall refund the amount of any input tax
47	47	that has been accrued by an entity exempt under Subsection (a) of
48	48	this section.
49	49	SECTION 1.06. EXCLUSIONS. The comptroller by rule shall
50	50	exclude the following services and property from the value added
51	51	tax:
52	52	(1) monetary instruments, financial assets, and
53	53	investments;
54	54	(2) intercompany services;
55	55	(3) employment services;
56	56	(4) incidental transactions;
57	57	(5) transfers of common interests in property;
58	58	(6) services and property taxed by other law,
59	59	including Chapters 201 and 202, Tax Code; and
60	60	(7) services and property this state is prohibited
61	61	from taxing by federal law or the Texas Constitution.
62	62	SECTION 1.07. RULES. The comptroller shall adopt all rules
63	63	necessary to implement, administer, and enforce the state value
64	64	added tax and all local value added taxes under this Act.
65	65	SECTION 1.08. DISPOSITION OF REVENUE. All proceeds from
66	66	the collection of the value added tax shall be deposited to the
67	67	credit of the general revenue fund.
68	68	SECTION 1.09. EFFECTIVE DATE OF ARTICLE. This article
69	69	takes effect January 1, 2026.
70	70	ARTICLE 2. LOCAL VALUE ADDED TAXES
71	71	SECTION 2.01. LOCAL SALES AND USE TAXES PROHIBITED.
72	72	Notwithstanding any other law, a political subdivision may not
73	73	impose a sales or use tax on or after the effective date of this
74	74	article.
75	75	SECTION 2.02. LOCAL VALUE ADDED TAXES. (a) A political
76	76	subdivision that was authorized to impose a sales and use tax
77	77	immediately before the effective date of this article may impose a
78	78	local value added tax on and after the effective date of this
79	79	article.
80	80	(b) A local value added tax is administered, collected, and
81	81	enforced by the comptroller in the same manner as the state value
82	82	added tax. The tax applies to the supply of services or property in
83	83	the territory of the political subdivision.
84	84	(c) The comptroller shall allocate and remit to each
85	85	appropriate taxing jurisdiction proceeds from the collection of
86	86	local value added taxes by the comptroller.
87	87	SECTION 2.03. RATES OF LOCAL VALUE ADDED TAXES. (a) The
88	88	combined rate of all local value added taxes may not exceed two
89	89	percent at any location in the territory of a political
90	90	subdivision.
91	91	(b) The maximum combined rate provided by Subsection (a) of
92	92	this section does not apply to or include a school district
93	93	enrichment value added tax under Article 3 of this Act.
94	94	(c) On the effective date of this article, a political
95	95	subdivision may begin imposing the local value added tax at a rate
96	96	not to exceed the rate at which the political subdivision imposed a
97	97	sales and use tax immediately before the effective date of this
98	98	article. Subject to Subsection (a) of this section, the governing
99	99	body of a political subdivision that imposes a local value added tax
100	100	may adopt an order or ordinance changing the rate of or repealing
101	101	the tax imposed by the political subdivision.
102	102	SECTION 2.04. EFFECTIVE DATE OF ARTICLE. This article
103	103	takes effect January 1, 2026.
104	104	ARTICLE 3. SCHOOL DISTRICT ENRICHMENT VALUE ADDED TAX
105	105	SECTION 3.01. TAX AUTHORIZED. (a) A school district may
106	106	adopt or repeal a school district enrichment value added tax at an
107	107	election in which a majority of the qualified voters of the school
108	108	district approve the adoption or repeal of the tax.
109	109	(b) A school district enrichment value added tax is
110	110	administered, collected, and enforced by the comptroller in the
111	111	same manner as the state value added tax. The tax applies to the
112	112	supply of services or property in the territory of the school
113	113	district.
114	114	SECTION 3.02. MAXIMUM RATE. The rate of the school district
115	115	enrichment value added tax may not exceed 0.5 percent.
116	116	SECTION 3.03. USE OF TAX REVENUE BY SCHOOL DISTRICT. (a)
117	117	Revenue from the school district enrichment value added tax is for
118	118	the use and benefit of the school district. The revenue must be
119	119	used exclusively for school enrichment facilities and activities
120	120	and for the payment of the principal of and interest on debt
121	121	incurred to fund school enrichment facilities and activities.
122	122	(b) Revenue from the school district enrichment value added
123	123	tax may not be used for an expenditure or investment that is:
124	124	(1) necessary to comply with the legislature's duty
125	125	under Section 1, Article VII, Texas Constitution, to provide for
126	126	the general diffusion of knowledge and an efficient system of
127	127	public schools, including by providing funding for instructional
128	128	facilities; and
129	129	(2) eligible for funding through the Foundation School
130	130	Program.
131	131	SECTION 3.04. PLEDGE OF REVENUE. A school district may
132	132	pledge a portion of the revenue from the school district enrichment
133	133	value added tax for the payment of obligations issued to pay all or
134	134	part of the cost of a school enrichment project in the school
135	135	district.
136	136	SECTION 3.05. EFFECTIVE DATE OF ARTICLE. This article
137	137	takes effect January 1, 2026, but only if Section 4.01 of this Act
138	138	takes effect. If Section 4.01 of this Act does not take effect,
139	139	this article has no effect.
140	140	ARTICLE 4. SCHOOL DISTRICT MAINTENANCE AND OPERATIONS AD VALOREM
141	141	TAXES
142	142	SECTION 4.01. PROHIBITION ON IMPOSITION OF SCHOOL DISTRICT
143	143	MAINTENANCE AND OPERATIONS AD VALOREM TAXES. (a) Notwithstanding
144	144	any other law, a school district may not impose an ad valorem tax
145	145	for maintenance and operations purposes on or after January 1,
146	146	2026. To the extent of a conflict, this section controls over a
147	147	conflicting provision in a general or special law.
148	148	(b) The change in law made by this section does not affect
149	149	tax liability accruing before the effective date of this section.
150	150	(c) This section takes effect January 1, 2026, but only if
151	151	on or before that date a constitutional amendment to prohibit a
152	152	school district from imposing an ad valorem tax for maintenance and
153	153	operations purposes is approved by the voters. If such a
154	154	constitutional amendment is not approved by the voters on or before
155	155	that date, this section has no effect.
156	156	SECTION 4.02. REPORT. (a) The comptroller shall prepare a
157	157	report that recommends any change in constitutional or statutory
158	158	law needed to implement this Act.
159	159	(b) Not later than December 1, 2022, the comptroller shall
160	160	submit to the governor, lieutenant governor, speaker of the house
161	161	of representatives, and members of the legislature the report
162	162	required by Subsection (a) of this section.
163	163	(c) This section expires January 1, 2023.
164	164	SECTION 4.03. EFFECTIVE DATE OF ARTICLE. Except as
165	165	otherwise provided by this article, this article takes effect on
166	166	the 91st day after the last day of the legislative session.
167	167	ARTICLE 5. SCHOOL FINANCE
168	168	SECTION 5.01. FOUNDATION SCHOOL PROGRAM FUNDING. (a)
169	169	Beginning with the 2026-2027 school year, the legislature shall
170	170	appropriate money to fund the Foundation School Program under
171	171	Chapter 48, Education Code, in an amount, excluding money collected
172	172	by a school district through the imposition of a tax, necessary to:
173	173	(1) comply with the legislature's duty under Section
174	174	1, Article VII, Texas Constitution, to provide for the general
175	175	diffusion of knowledge and an efficient system of public schools;
176	176	(2) achieve the state policy under Section 48.001,
177	177	Education Code, and the purposes of the Foundation School Program
178	178	under Section 48.002, Education Code;
179	179	(3) provide the basic allotment under Section 48.051,
180	180	Education Code, in an amount of at least $6,160 per student in
181	181	average daily attendance; and
182	182	(4) provide a minimal level of revenue to provide
183	183	school districts an opportunity to pursue locally funded enrichment
184	184	programs.
185	185	(b) This section takes effect January 1, 2026, but only if
186	186	Section 4.01 of this Act takes effect. If Section 4.01 of this Act
187	187	does not take effect, this section has no effect.
188	188	SECTION 5.02. EFFECT OF PROHIBITION ON SCHOOL DISTRICT
189	189	MAINTENANCE AND OPERATIONS TAX. (a) Article 4 of this Act does not
190	190	affect the authority of a school district to impose an enrichment
191	191	value added tax at a rate not to exceed 0.5 percent in accordance
192	192	with Article 3 of this Act for the purpose of providing additional
193	193	revenue to enrich the educational opportunities of students
194	194	enrolled in the district. The revenue attributable to the tax
195	195	described by this subsection is in addition to any money the
196	196	district receives from the state.
197	197	(b) A reference in the Education Code, the Tax Code, or any
198	198	other law to a school district's authority to impose a maintenance
199	199	tax or a maintenance and operations tax may not be construed in a
200	200	manner inconsistent with Article 4 of this Act or this section.
201	201	(c) This section takes effect January 1, 2026, but only if
202	202	Section 4.01 of this Act takes effect. If Section 4.01 of this Act
203	203	does not take effect, this section has no effect.
204	204	SECTION 5.03. STATE ASSISTANCE FOR TRANSITION TO SCHOOL
205	205	DISTRICT ENRICHMENT VALUE ADDED TAX. (a) For purposes of budgeting
206	206	for and funding of maintenance and operations and enrichment, the
207	207	commissioner of education shall assist school districts in
208	208	transitioning from the use of maintenance and operations tax
209	209	revenue to the use of state funding and enrichment value added tax
210	210	revenue.
211	211	(b) Not later than March 1, 2026, each school district shall
212	212	prepare and submit to the commissioner of education a transition
213	213	report certified by the comptroller that provides for the following
214	214	10 state fiscal years estimates regarding:
215	215	(1) budgets;
216	216	(2) sources of funding; and
217	217	(3) operating and capital expenditures.
218	218	(c) In the transition report prepared under Subsection (b)
219	219	of this section, a school district shall, in accordance with the
220	220	policy and purposes described by Sections 48.001 and 48.002,
221	221	Education Code, classify as "foundational" or "enrichment":
222	222	(1) each projected operating and capital expenditure
223	223	and the proportion of each current and projected debt; and
224	224	(2) the proportional amounts of current and projected
225	225	debts, based on the proposed uses for the revenue.
226	226	(d) Based on school districts' reports under Subsection (b)
227	227	of this section, the commissioner of education shall prepare and
228	228	present to the comptroller recommendations for refunding,
229	229	redeeming, or amending outstanding bonds for which school districts
230	230	pledged maintenance and operations tax revenue for payment.
231	231	(e) Notwithstanding any other law, the commissioner of
232	232	education shall provide state funding for the payment of any bonds
233	233	classified by a school district as a "foundational" bond under
234	234	Subsection (c) of this section. A school district assumes full
235	235	financial responsibility for any bond classified as an "enrichment"
236	236	bond.
237	237	(f) The commissioner of education shall annually prepare
238	238	and provide a report to the legislature and the comptroller
239	239	regarding funding under the Foundation School Program and the
240	240	transition by school districts to imposing a value added enrichment
241	241	tax. The report must include recommendations for legislative
242	242	action to facilitate the funding transitions required under this
243	243	Act while maintaining and improving the efficiency, quality, and
244	244	results of public education in this state.
245	245	(g) Subsection (e) of this section takes effect January 1,
246	246	2026, but only if Section 4.01 of this Act takes effect. If Section
247	247	4.01 of this Act does not take effect, Subsection (e) of this
248	248	section has no effect.
249	249	SECTION 5.04. EFFECTIVE DATE OF ARTICLE. Except as
250	250	otherwise provided by this article, this article takes effect on
251	251	the 91st day after the last day of the legislative session.
252	252	ARTICLE 6. REPEALED PROVISIONS
253	253	SECTION 6.01. TAX CODE. (a) The following provisions of
254	254	the Tax Code are repealed:
255	255	(1) Chapter 142;
256	256	(2) Subtitles E, F, G, H, I, and J, Title 2; and
257	257	(3) Subtitle C, Title 3.
258	258	(b) The repeal of a provision by this section does not
259	259	affect tax liability accruing before the effective date of this
260	260	article. That liability continues in effect as if this article had
261	261	not been enacted, and the former law is continued in effect for the
262	262	collection of taxes due and for civil and criminal enforcement of
263	263	the liability for those taxes.
264	264	SECTION 6.02. EDUCATION CODE. (a) The following
265	265	provisions of the Education Code are repealed:
266	266	(1) Sections 45.0032, 48.255, 48.2551, 48.2552,
267	267	48.2553, 48.256, 48.257, and 48.275; and
268	268	(2) Chapter 49.
269	269	(b) This section takes effect only if Section 4.01 of this
270	270	Act takes effect. If Section 4.01 of this Act does not take effect,
271	271	this section has no effect.
272	272	SECTION 6.03. EFFECTIVE DATE OF ARTICLE. Except as
273	273	otherwise provided by this article, this article takes effect
274	274	January 1, 2026.