If enacted, HB695 would reshape the landscape for how state and local governments manage revenues from excise taxes. By providing clearer definitions and excluding general sales taxes from certain restrictions, the bill could potentially lead to an increased capacity for local governments to utilize excise tax revenues more effectively in its budgeting and funding processes. The clarity brought by this legislation may facilitate enhanced financial planning and disbursement, ensuring that public services dependent on these revenues are adequately supported.
Summary
House Bill 695, also known as the State and Local General Sales Tax Protection Act, proposes amendments to Title 49 of the United States Code with the objective of clarifying the usage of certain taxes and revenues. Specifically, the bill aims to amend definitions related to local and state taxation, focusing on excise taxes while explicitly excluding general sales taxes from its provisions. This act is an effort by its sponsors to ensure better delineation in tax regulations, enhancing clarity for state and local governments regarding the application of these taxes in certain contexts.
Contention
While there is support for the bill's intent to clarify tax definitions, there may be contention regarding the potential implications for local government autonomy in revenue generation. Critics could argue that overly prescriptive legislation in taxation could hinder the ability of municipalities to fund programs critical to local needs. Additionally, the exclusions of general sales taxes might raise questions about equity and fairness in taxation practices, particularly in jurisdictions where sales taxes are a significant part of the revenue stream.
FairTax Act of 2023 This bill imposes a national sales tax on the use or consumption in the United States of taxable property or services in lieu of the current income taxes, payroll taxes, and estate and gift taxes. The rate of the sales tax will be 23% in 2025, with adjustments to the rate in subsequent years. There are exemptions from the tax for used and intangible property; for property or services purchased for business, export, or investment purposes; and for state government functions. Under the bill, family members who are lawful U.S. residents receive a monthly sales tax rebate (Family Consumption Allowance) based upon criteria related to family size and poverty guidelines. The states have the responsibility for administering, collecting, and remitting the sales tax to the Treasury. Tax revenues are to be allocated among (1) the general revenue, (2) the old-age and survivors insurance trust fund, (3) the disability insurance trust fund, (4) the hospital insurance trust fund, and (5) the federal supplementary medical insurance trust fund. No funding is authorized for the operations of the Internal Revenue Service after FY2027. Finally, the bill terminates the national sales tax if the Sixteenth Amendment to the Constitution (authorizing an income tax) is not repealed within seven years after the enactment of this bill.