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Texas House Bill HB960

Texas 2025 - 89th Regular

Texas House Bill HB960 Compare Versions

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11 By: Toth H.B. No. 960
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66 A BILL TO BE ENTITLED
77 AN ACT
88 relating to the repeal of or limitations on certain state and local
99 taxes, including school district maintenance and operations ad
1010 valorem taxes, the enactment of state and local value added taxes,
1111 and related school finance reform; imposing taxes.
1212 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1313 ARTICLE 1. STATE VALUE ADDED TAX
1414 SECTION 1.01. DEFINITIONS. In this article:
1515 (1) "Input tax" means the aggregate amount of all
1616 state and local value added taxes imposed under this Act that have
1717 accrued with respect to services and property supplied to a
1818 taxpayer during a calendar quarter and used or held for use by the
1919 taxpayer in the ordinary course of the taxpayer's trade or
2020 business.
2121 (2) "Output tax" means the aggregate amount of all
2222 state and local value added taxes imposed under this Act that have
2323 accrued with respect to services and property supplied by a
2424 taxpayer during a calendar quarter in the ordinary course of the
2525 taxpayer's trade or business.
2626 (3) "Taxpayer" means a person on whom the value added
2727 tax is imposed.
2828 (4) "Value added tax" means the tax imposed under
2929 Section 1.02 of this article.
3030 SECTION 1.02. VALUE ADDED TAX IMPOSED. A value added tax is
3131 imposed on each person in this state who supplies any service or
3232 property in the ordinary course of a trade or business in which the
3333 person engages for profit.
3434 SECTION 1.03. RATE OF TAX. The rate of the value added tax
3535 is 6.72 percent of the taxpayer's taxable receipts from the supply
3636 of services or property.
3737 SECTION 1.04. DETERMINATION OF TAX PAYABLE. The total
3838 amount of state and local value added taxes under this Act payable
3939 by a taxpayer for a calendar quarter is the amount, if any, by which
4040 the taxpayer's output tax exceeds the taxpayer's input tax.
4141 SECTION 1.05. EXEMPTIONS. (a) The comptroller by rule
4242 shall exempt from the value added tax:
4343 (1) small businesses;
4444 (2) governmental entities; and
4545 (3) religious, educational, and public service
4646 organizations.
4747 (b) The comptroller shall refund the amount of any input tax
4848 that has been accrued by an entity exempt under Subsection (a) of
4949 this section.
5050 SECTION 1.06. EXCLUSIONS. The comptroller by rule shall
5151 exclude the following services and property from the value added
5252 tax:
5353 (1) monetary instruments, financial assets, and
5454 investments;
5555 (2) intercompany services;
5656 (3) employment services;
5757 (4) incidental transactions;
5858 (5) transfers of common interests in property;
5959 (6) services and property taxed by other law,
6060 including Chapters 201 and 202, Tax Code; and
6161 (7) services and property this state is prohibited
6262 from taxing by federal law or the Texas Constitution.
6363 SECTION 1.07. RULES. The comptroller shall adopt all rules
6464 necessary to implement, administer, and enforce the state value
6565 added tax and all local value added taxes under this Act.
6666 SECTION 1.08. DISPOSITION OF REVENUE. All proceeds from
6767 the collection of the value added tax shall be deposited to the
6868 credit of the general revenue fund.
6969 SECTION 1.09. EFFECTIVE DATE OF ARTICLE. This article
7070 takes effect January 1, 2030.
7171 ARTICLE 2. LOCAL VALUE ADDED TAXES
7272 SECTION 2.01. LOCAL SALES AND USE TAXES PROHIBITED.
7373 Notwithstanding any other law, a political subdivision may not
7474 impose a sales or use tax on or after the effective date of this
7575 article.
7676 SECTION 2.02. LOCAL VALUE ADDED TAXES. (a) A political
7777 subdivision that was authorized to impose a sales and use tax
7878 immediately before the effective date of this article may impose a
7979 local value added tax on and after the effective date of this
8080 article.
8181 (b) A local value added tax is administered, collected, and
8282 enforced by the comptroller in the same manner as the state value
8383 added tax. The tax applies to the supply of services or property in
8484 the territory of the political subdivision.
8585 (c) The comptroller shall allocate and remit to each
8686 appropriate taxing jurisdiction proceeds from the collection of
8787 local value added taxes by the comptroller.
8888 SECTION 2.03. RATES OF LOCAL VALUE ADDED TAXES. (a) The
8989 combined rate of all local value added taxes may not exceed two
9090 percent at any location in the territory of a political
9191 subdivision.
9292 (b) The maximum combined rate provided by Subsection (a) of
9393 this section does not apply to or include a school district
9494 enrichment value added tax under Article 3 of this Act.
9595 (c) On the effective date of this article, a political
9696 subdivision may begin imposing the local value added tax at a rate
9797 not to exceed the rate at which the political subdivision imposed a
9898 sales and use tax immediately before the effective date of this
9999 article. Subject to Subsection (a) of this section, the governing
100100 body of a political subdivision that imposes a local value added tax
101101 may adopt an order or ordinance changing the rate of or repealing
102102 the tax imposed by the political subdivision.
103103 SECTION 2.04. EFFECTIVE DATE OF ARTICLE. This article
104104 takes effect January 1, 2030.
105105 ARTICLE 3. SCHOOL DISTRICT ENRICHMENT VALUE ADDED TAX
106106 SECTION 3.01. TAX AUTHORIZED. (a) A school district may
107107 adopt or repeal a school district enrichment value added tax at an
108108 election in which a majority of the qualified voters of the school
109109 district approve the adoption or repeal of the tax.
110110 (b) A school district enrichment value added tax is
111111 administered, collected, and enforced by the comptroller in the
112112 same manner as the state value added tax. The tax applies to the
113113 supply of services or property in the territory of the school
114114 district.
115115 SECTION 3.02. MAXIMUM RATE. The rate of the school district
116116 enrichment value added tax may not exceed 0.5 percent.
117117 SECTION 3.03. USE OF TAX REVENUE BY SCHOOL DISTRICT. (a)
118118 Revenue from the school district enrichment value added tax is for
119119 the use and benefit of the school district. The revenue must be
120120 used exclusively for school enrichment facilities and activities
121121 and for the payment of the principal of and interest on debt
122122 incurred to fund school enrichment facilities and activities.
123123 (b) Revenue from the school district enrichment value added
124124 tax may not be used for an expenditure or investment that is:
125125 (1) necessary to comply with the legislature's duty
126126 under Section 1, Article VII, Texas Constitution, to provide for
127127 the general diffusion of knowledge and an efficient system of
128128 public schools, including by providing funding for instructional
129129 facilities; and
130130 (2) eligible for funding through the Foundation School
131131 Program.
132132 SECTION 3.04. PLEDGE OF REVENUE. A school district may
133133 pledge a portion of the revenue from the school district enrichment
134134 value added tax for the payment of obligations issued to pay all or
135135 part of the cost of a school enrichment project in the school
136136 district.
137137 SECTION 3.05. EFFECTIVE DATE OF ARTICLE. This article
138138 takes effect January 1, 2030, but only if Section 4.01 of this Act
139139 takes effect. If Section 4.01 of this Act does not take effect,
140140 this article has no effect.
141141 ARTICLE 4. SCHOOL DISTRICT MAINTENANCE AND OPERATIONS AD VALOREM
142142 TAXES
143143 SECTION 4.01. PROHIBITION ON IMPOSITION OF SCHOOL DISTRICT
144144 MAINTENANCE AND OPERATIONS AD VALOREM TAXES. (a) Notwithstanding
145145 any other law, a school district may not impose an ad valorem tax
146146 for maintenance and operations purposes on or after January 1,
147147 2030. To the extent of a conflict, this section controls over a
148148 conflicting provision in a general or special law.
149149 (b) The change in law made by this section does not affect
150150 tax liability accruing before the effective date of this section.
151151 (c) This section takes effect January 1, 2030, but only if
152152 on or before that date a constitutional amendment to prohibit a
153153 school district from imposing an ad valorem tax for maintenance and
154154 operations purposes is approved by the voters. If such a
155155 constitutional amendment is not approved by the voters on or before
156156 that date, this section has no effect.
157157 SECTION 4.02. REPORT. (a) The comptroller shall prepare a
158158 report that recommends any change in constitutional or statutory
159159 law needed to implement this Act.
160160 (b) Not later than December 1, 2026, the comptroller shall
161161 submit to the governor, lieutenant governor, speaker of the house
162162 of representatives, and members of the legislature the report
163163 required by Subsection (a) of this section.
164164 (c) This section expires January 1, 2027.
165165 SECTION 4.03. EFFECTIVE DATE OF ARTICLE. Except as
166166 otherwise provided by this article, this article takes effect
167167 September 1, 2025.
168168 ARTICLE 5. SCHOOL FINANCE
169169 SECTION 5.01. FOUNDATION SCHOOL PROGRAM FUNDING. (a)
170170 Beginning with the 2030-2031 school year, the legislature shall
171171 appropriate money to fund the Foundation School Program under
172172 Chapter 48, Education Code, in an amount, excluding money collected
173173 by a school district through the imposition of a tax, necessary to:
174174 (1) comply with the legislature's duty under Section
175175 1, Article VII, Texas Constitution, to provide for the general
176176 diffusion of knowledge and an efficient system of public schools;
177177 (2) achieve the state policy under Section 48.001,
178178 Education Code, and the purposes of the Foundation School Program
179179 under Section 48.002, Education Code;
180180 (3) provide the basic allotment under Section 48.051,
181181 Education Code, in an amount of at least $6,160 per student in
182182 average daily attendance; and
183183 (4) provide a minimal level of revenue to provide
184184 school districts an opportunity to pursue locally funded enrichment
185185 programs.
186186 (b) This section takes effect January 1, 2030, but only if
187187 Section 4.01 of this Act takes effect. If Section 4.01 of this Act
188188 does not take effect, this section has no effect.
189189 SECTION 5.02. EFFECT OF PROHIBITION ON SCHOOL DISTRICT
190190 MAINTENANCE AND OPERATIONS TAX. (a) Article 4 of this Act does not
191191 affect the authority of a school district to impose an enrichment
192192 value added tax at a rate not to exceed 0.5 percent in accordance
193193 with Article 3 of this Act for the purpose of providing additional
194194 revenue to enrich the educational opportunities of students
195195 enrolled in the district. The revenue attributable to the tax
196196 described by this subsection is in addition to any money the
197197 district receives from the state.
198198 (b) A reference in the Education Code, the Tax Code, or any
199199 other law to a school district's authority to impose a maintenance
200200 tax or a maintenance and operations tax may not be construed in a
201201 manner inconsistent with Article 4 of this Act or this section.
202202 (c) This section takes effect January 1, 2030, but only if
203203 Section 4.01 of this Act takes effect. If Section 4.01 of this Act
204204 does not take effect, this section has no effect.
205205 SECTION 5.03. STATE ASSISTANCE FOR TRANSITION TO SCHOOL
206206 DISTRICT ENRICHMENT VALUE ADDED TAX. (a) For purposes of budgeting
207207 for and funding of maintenance and operations and enrichment, the
208208 commissioner of education shall assist school districts in
209209 transitioning from the use of maintenance and operations tax
210210 revenue to the use of state funding and enrichment value added tax
211211 revenue.
212212 (b) Not later than March 1, 2030, each school district shall
213213 prepare and submit to the commissioner of education a transition
214214 report certified by the comptroller that provides for the following
215215 10 state fiscal years estimates regarding:
216216 (1) budgets;
217217 (2) sources of funding; and
218218 (3) operating and capital expenditures.
219219 (c) In the transition report prepared under Subsection (b)
220220 of this section, a school district shall, in accordance with the
221221 policy and purposes described by Sections 48.001 and 48.002,
222222 Education Code, classify as "foundational" or "enrichment":
223223 (1) each projected operating and capital expenditure
224224 and the proportion of each current and projected debt; and
225225 (2) the proportional amounts of current and projected
226226 debts, based on the proposed uses for the revenue.
227227 (d) Based on school districts' reports under Subsection (b)
228228 of this section, the commissioner of education shall prepare and
229229 present to the comptroller recommendations for refunding,
230230 redeeming, or amending outstanding bonds for which school districts
231231 pledged maintenance and operations tax revenue for payment.
232232 (e) Notwithstanding any other law, the commissioner of
233233 education shall provide state funding for the payment of any bonds
234234 classified by a school district as a "foundational" bond under
235235 Subsection (c) of this section. A school district assumes full
236236 financial responsibility for any bond classified as an "enrichment"
237237 bond.
238238 (f) The commissioner of education shall annually prepare
239239 and provide a report to the legislature and the comptroller
240240 regarding funding under the Foundation School Program and the
241241 transition by school districts to imposing a value added enrichment
242242 tax. The report must include recommendations for legislative
243243 action to facilitate the funding transitions required under this
244244 Act while maintaining and improving the efficiency, quality, and
245245 results of public education in this state.
246246 (g) Subsection (e) of this section takes effect January 1,
247247 2030, but only if Section 4.01 of this Act takes effect. If Section
248248 4.01 of this Act does not take effect, Subsection (e) of this
249249 section has no effect.
250250 SECTION 5.04. EFFECTIVE DATE OF ARTICLE. Except as
251251 otherwise provided by this article, this article takes effect
252252 September 1, 2025.
253253 ARTICLE 6. REPEALED PROVISIONS
254254 SECTION 6.01. TAX CODE. (a) The following provisions of
255255 the Tax Code are repealed:
256256 (1) Chapter 142;
257257 (2) Subtitles E, F, G, H, and J, Title 2; and
258258 (3) Subtitle C, Title 3.
259259 (b) The repeal of a provision by this section does not
260260 affect tax liability accruing before the effective date of this
261261 article. That liability continues in effect as if this article had
262262 not been enacted, and the former law is continued in effect for the
263263 collection of taxes due and for civil and criminal enforcement of
264264 the liability for those taxes.
265265 SECTION 6.02. EDUCATION CODE. (a) The following
266266 provisions of the Education Code are repealed:
267267 (1) Sections 45.0032, 48.255, 48.2551, 48.2552,
268268 48.2553, 48.256, 48.257, and 48.275; and
269269 (2) Chapter 49.
270270 (b) This section takes effect only if Section 4.01 of this
271271 Act takes effect. If Section 4.01 of this Act does not take effect,
272272 this section has no effect.
273273 SECTION 6.03. EFFECTIVE DATE OF ARTICLE. Except as
274274 otherwise provided by this article, this article takes effect
275275 January 1, 2030.