HBA-RBT H.B. 2413 76(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 2413
By: Hilbert
Ways & Means
4/19/1999
Introduced



BACKGROUND AND PURPOSE 

The ability to quickly and seamlessly communicate will drive economies in
the 21st century.  The transformation of the Texas economy from a
manufacturing base to a service base increases the need for quality
telecommunications.  Businesses, governments, educational institutions, and
hospitals now require modern telecommunication systems to compete in the
global economy and provide essential services.  

Additionally, the telecommunications industry is creating jobs in Texas
much more rapidly that predicted. Just four years after a Texas Workforce
Commission study, the communications industry employs nearly as many
employees as the Commission projected for the year 2005.  By allowing a
sales tax incentive for the purchase of telecommunications equipment Texas
can ensure that it will remain competitive with other states and maintain
and grow an industry vital to the state's future. 

H.B. 2413 exempts from sales taxes machinery, equipment operating software
and replacement parts and accessories used to provide telecommunications
service or Internet service. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Subchapter H, Chapter 151, Tax Code, by adding Section
151.3235, as follows: 

Sec.  151.3235.  CERTAIN TELECOMMUNICATIONS MACHINERY AND EQUIPMENT.
Defines "Internet," "Internet service provider," and "telecommunications
provider."  Provides that machinery, equipment, operating software, and
replacement parts and accessories used to provide telecommunications
service or Internet service are exempt from the taxes imposed by this
chapter if the machinery, equipment, operating software, replacement parts,
or accessories are sold, leased, or rented to, or stored, used, or consumed
by a telecommunications provider in the conduct of a telecommunications
service or Internet service business, or a subsidiary, affiliate, partner,
or co-venturer of the telecommunications provider who uses the equipment to
upgrade systems to allow for the provision of the telecommunications
service or Internet service.  Provides that the exemption provided by this
section does not include office furniture and related office equipment. 

SECTION 2.  Effective date: The first day of the first calendar quarter
beginning on or after the                           earliest date that it
may take effect under Section 39, Article III, Texas Constitution.
Makes application of this Act prospective.  

SECTION 3.  Emergency clause.