Contact: Melissa Duncan, Communications Director
On the agenda: Franchise Tax, Sales Tax Holiday, Fiscal Responsibility
The Senate Finance Committee will convene at 9:30 a.m. to take up its interim charge relating to the franchise tax, sales tax holiday, and fiscal responsibility. To watch the hearing online, click here.
Franchise Tax Highlights
- The committee has been directed to study the benefits, including the dynamic effects, of continuing to phase out the franchise tax, and consider alternate approaches to funding the Property Tax Relief Fund.
- Last session Senator Nelson sponsored legislation providing over $2.5 billion in business tax relief, cutting the franchise tax by 25 percent, and directing the Comptroller to study the budget impact of phasing out the tax altogether.
- The franchise tax generated $9.39 billion in FY 14-15.
- The Office of the Comptroller, the Legislative Budget Board (LBB) and stakeholders will testify.
Sales Tax Holiday Highlights
- The committee has been directed to review the state's current sales tax holiday structure and determine its economic benefit to the state; evaluate and consider the merits of any potential expansion of the tax holiday either in the application of the sales tax exemption or the timing of the holiday.
- The sales tax holiday for clothing and footwear was enacted in 1999 and for school supplies and backpacks in 2007 to provide sales tax relief on back-to-school items. It has grown over the years with Energy Star items added in 2007 and both emergency preparedness and water efficiency items added in 2015.
- The back to school holiday provided $87.2 million in sales tax relief in 2015 and $82.7million in 2014. The Energy Star holiday provided $3.8 million in sales tax relief in 2014 and also in 2015.
- FY 16-17 projected tax savings for the two additional tax holidays enacted in 2015 are: $2.25 million for emergency preparedness and $7.7 million for water efficiency.
- Invited witnesses include: LBB, Comptroller, Texas Retailers Association, and Center for Public Policy Priorities.
Fiscal Responsibility Highlights
- The committee has been directed to review the budget process in other states with the goal of making the Texas budget process more transparent; review and make recommendations to reduce state debt liabilities, including state pension liability; and consider how to incentivize state agencies, boards, and commissions to identify and realize savings to taxpayers.
- According to Census data, Texas has the second lowest state debt per capita among the 10 largest states.
- The 84th Legislature conducted a strategic fiscal review of agencies to improve efficiencies.
- Invited witnesses include: LBB and Texas Conservative Coalition Research Institute.
Statement from Senator Nelson: "We have made tremendous strides in reducing the tax burden, making the budget more transparent and strengthening the policies of fiscal discipline that have shaped our economic success. We must continue to look for ways to protect taxpayers and make sure that our citizens understand exactly how their money is being spent."