Posted on 03/03/2005 9:38:35 PM PST by ElephantinTexas
Bill boosts sales tax to reduce levy on property Measure panel OK'd would raise local sales tax to 9.2%, cut property taxes by one-third By CLAY ROBISON and JANET ELLIOTT
Copyright 2005 Houston Chronicle Austin Bureau AUSTIN — Texas would have the highest state sales tax in the country, businesses would pay a payroll tax and smokers would pay a dollar more for cigarettes in exchange for a cut in school property taxes under a bill approved Wednesday by a House committee.
The measure, which also includes new taxes on bottled water, auto repair services and car washes, would raise nearly $11 billion over the next two years, all of which would pay for lowering school property taxes by about one-third.
House Speaker Tom Craddick said he hoped to see the bill debated by the full House next week, right after debate on a related measure proposing major changes in school funding and operations.
House approval would send the bill to the Senate, which has indicated it will make some changes.
The House Ways and Means Committee voted 6-2 in favor of the bill Wednesday evening. Two Democrats, Vilma Luna of Corpus Christi and Allan Ritter of Nederland, voted "no," and Houston Democrat Al Edwards voted "present."
Luna said she would like to see a smaller cut in property taxes in exchange for a smaller sales tax hike.
The proposed sales tax hike from 6.25 percent to 7.2 percent would give Texas the highest state sales tax in the nation, according to the Federation of Tax Administrators.
In Houston, the sales tax rate would climb to 9.2 percent because residents already pay an extra 2 percent in local sales taxes. Cities in at least seven other states have a combined state and local rate that already is higher than 9.2 percent. Many states with lower sales tax rates have state income taxes, which Texas does not.
The new tax bill wouldn't increase overall education funding. Craddick and Ways and Means Chairman Jim Keffer, R-Eastland, said the goal instead was to lower local school property taxes, which now pay for most public school costs and are a major source of taxpayer anger, particularly in suburban, Republican-oriented communities. "The focus needs to remain that this is a property tax reduction bill," Keffer said.
The measure, House Bill 3, would lower the cap on local property taxes for school operations from the current $1.50 per $100 valuation to $1 per $100. The cut would apply to both residential and business property.
Bill details.
Besides raising the state sales tax to recoup that lost revenue, the bill would: Add several items and services to the sales tax, including bottled water, motor vehicle repair services, car washes and detail services and billboard advertising.
Replace the corporate franchise tax, which most businesses don't have to pay, with a broader tax of 1.1 percent on a business's payroll, up to $80,000 per year per employee. The tax would apply to all forms of businesses, including sole proprietors who have employees.
Increase the state cigarette tax from 41 cents per pack to $1.41.
Increase the motor vehicle sales tax from 6.25 percent to 7.35 percent.
House Bill 2, the related education overhaul also headed for the House floor next week, would increase education funding by $3 billion over the next two years. But that money, which school groups have attacked as inadequate, would come from elsewhere in the state budget, not from the tax bill.
Reaction to the business tax proposal was mixed. Representatives from chemical companies, electric utilities and large manufacturers expressed support. Several small-business owners criticized the proposal, saying that it would prevent them from hiring new employees.
The payroll tax also is opposed by retailers and other companies with large numbers of low-paid workers.
It would raise about $7 billion over the next two years, or most of the revenue from the bill, Keffer said. He and Craddick called it a "reform franchise tax."
`Simple and fair´ Gov. Rick Perry's opposition to a payroll tax helped kill a special session on school finance last spring. Perry said then that he feared the proposal would discourage companies from creating new jobs in Texas.
Spokeswoman Kathy Walt said Wednesday that the governor still has concerns about the tax and will remain involved in negotiations with lawmakers. "We're still a long way from having the final (revenue) package developed," she said. The Texas Constitution requires tax bills to originate in the House.
Senate leaders, however, already have said they prefer a new business tax based on a combination of revenues and employee compensation. Law firms and other professional partnerships have attacked the Senate plan as an "income tax."
"What we're trying to do is make it (the business tax) broad-based, simple and fair," Keffer said. He said reaction from other House members was "mixed" and he expects efforts to change it during floor debate.
"It's a change, you know, and changes are tough," he said. But the objective, he added, was to pass a bill lowering school property taxes that overall was "revenue-neutral."
Although many Texans, particularly low-income people, live in rental housing, Keffer said the bill included no requirement that landlords pass through their property tax relief in the form of lower rents. "The market will prevail," he said.
The tax bill also provides that 15 percent of future increases in available state revenue be used for further reductions in school property taxes. But it doesn't include language to lower the cap on property appraisals, a Perry priority. That provision, which will require a constitutional amendment, will be handled in a separate bill, Craddick said.
The last time the Legislature enacted a general increase in state taxes was in 1991. Then-Gov. George W. Bush attempted to trade higher state taxes for lower school property taxes in 1997 but failed. But the Legislature that year increased the homestead exemption, a form of a tax break for residential property owners.
clay.robison@chron.com janet.elliott@chron.com
Higher Taxes in Texas PING.
That 'business tax' is a shadow income tax, they know they can't pass it in a statewide vote
I've already written the Governor, Ray Allan and Linda harper-Brown... they'd better not support it... well Ray Allen is my OLD state rep...
Good gracious!
Y'all are entering Oregon territory,
tax-wise, at warp speed!
And, we don't have a sales tax.
If I do the math, it would work well for me. I pay over $2000 annually on property taxes. The big question is, since the sales tax is imposed by the state and the property taxes are local, what is the guarantee that the property tax would be reduced by a third? The state is guaranteed their 0.95%.
Here's some MORE reading for your enjoyment from KMAC-28, Lubbock.
State Smoking Tax Clears First Hurdle.
Some state lawmakers want smokers to pay for lower property taxesThe Texas House Way and Means Committee gave the green light to a proposed cigarette tax on Thursday.
The extra dollar per pack will help the state fund education, while also reducing property taxes statewide. It`s part of a larger plan that includes a tax on business salaries and a higher sales tax.
The tax plan will affect the price of bottled water, car washes, car repairs and billboard advertisements.
It still needs to pass the Texas House of Representatives and Senate.
Governor Perry reportedly supports the plan.
Here's the link-
http://www.abc28.com/news/default.asp?mode=shownews&id=748
one of the greatest things about texas is its ability to remain relativly free from big government and it lets the people live more independantly than the rest of the country. I lived in texas for awhile a few years ago and believe me......texans have so many less hassles from the state than other states. TEXANS!! DO NOT MAKE THE MISTAKE OF LETTING YOUR STATE GOVERNMENT TAKE ANY MORE CONTROL OF YOUR LIFE AND FREEDOMS!! You give them an inch and they'll take everything! They've done it in my state(michigan) and they'll do it there. you can't even paint your walls inside your house without first getting permission and a 200$ permit here!! It didn't used to be like that. we didn't keep a close eye on our freedoms and now we are paying for it!
Well the BIGGEST reason I'm so mad, BD, is a) I currently live in an apartment so I AGAIN don't benefit from any of this and B!) I smoke and I don't have any KIDS! Why should I have to pay an extra $1 a pack on smokes to pay for a Texas Public School System I don't even have any kids in??!!
bump
Bill boosts sales tax to reduce levy on property Measure panel OK'd would raise local sales tax to 9.2%, cut property taxes by one-third .....Holy Shiite, Batman! A day or two ago, it was 7.2%!! :^O
I need to come back here and read all of this later.
First... Damnnnnn I thought Texas was the heartland of conservatives.
Second notice how they have to negotiate to lower property taxes.. exchanging one tax, for THREE new taxes?? (with no mention of hmm why don't we cut government)
Welcome to America, hombre. It's about time Texans started paying their fair share.
"I smoke and I don't have any KIDS! Why should I have to pay an extra $1 a pack on smokes to pay for a Texas Public School System I don't even have any kids in??!!"
Exactly. And that is also the objective argument against property taxes for schools.
This nation was the place where people could go to get away from the nanny statists elsewhere... Life, liberty and property were to be protected. Not property taken away by the people supposed to be protecting it, to pay for someone else's child(ren) to go to school.
Pretty soon they will be expecting you to pay for their 80 year old grandfathers pension.. And to pay for their Mexican maid's health care.
Oh, I see now. From the article:The proposed sales tax hike from 6.25 percent to 7.2 percent would give Texas the highest state sales tax in the nation, according to the Federation of Tax Administrators.
In Houston, the sales tax rate would climb to 9.2 percent because residents already pay an extra 2 percent in local sales taxes. Cities in at least seven other states have a combined state and local rate that already is higher than 9.2 percent. Many states with lower sales tax rates have state income taxes, which Texas does not.
Here in Dallas county, ours is 8.25%. The additional is due to the DART thing, I think. So Dallas county would be 10.2%, up from 8.25% then.
Yippy... someones gonna get rich, but it ain't us.
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