HBA-RBT, RAR H.B. 607 76(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 607
By: Heflin
Ways & Means
2/25/1999
Introduced



BACKGROUND AND PURPOSE 

A general sales and use tax was enacted in Texas in 1961 at a rate of two
percent on the purchase of taxable items.  In the past 38 years, the rate
has been increased seven times, with four of those changes coming in the
six-year period from 1984 to 1990.  Local option taxes for cities, transit
authorities, and economic development projects have also been enacted up to
another two percent in addition to the state rate.   

The sales tax is one of the most reliable and highest performing taxes in
our state's tax system, now responsible for over half of the revenue
collected in Texas.  The items that have been subject to or exempted from
taxation have changed over the past 38 years to reflect policy choices to
lessen selected tax burdens relative to others.  There has not, in the
history of this tax, ever been a universal reform of the sales tax system
without an accompanying rate increase.  H.B. 607 lowers the state's general
sales and use tax rate from 6.25 percent to five percent. 

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 Section 151.051(b), Tax Code, to establish that the
sales tax rate is five percent, rather than 6 1/4 percent, of the sales
price of the taxable item sold. 

SECTION 2.  Effective date: October 1, 1999. 
                       Makes application of this Act prospective.

SECTION 3.  Emergency clause.