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.