Texas 2021 - 87th 3rd C.S.

Texas House Bill HB117 Compare Versions

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

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