THE BILLS

Texas House takes swift action

The Texas House of Representatives wasted no time, passing all of the following bills on to the Senate between April 24-27, 2006:

HB 3, sponsored by Rep. Jim Keffer (Eastland), Rep. John Otto (Dayton), and Rep. Vilma Luna (Corpus Christi), revises the franchise tax provisions in Texas to ensure that each business that is subject to the tax pays its fair share. Under the new plan, the primary franchise tax rate will be lowered from 4.5% to 1%. Employers will then have a choice of deducting the cost of goods sold or labor and employee benefits costs to calculate their state tax obligation. This will bring an estimated $3.8 billion to the state from businesses that currently avoid paying the franchise tax. HB 3 is the primary piece of legislation needed for meaningful, long-term property-tax reform in Texas.

HB 1, sponsored by Rep. Warren Chisum (Pampa), Rep. Rob Eissler (The Woodlands), and Rep. Dan Branch (Dallas), will buy down property tax rates by $0.17 in the first year and deter local taxing jurisdictions from eating up the tax reduction by rapidly increasing local rates. The bill would go into effect this year.

HB 4, sponsored by Rep. David Swinford (Dumas), tightens the language and the requirements for the sale of motor vehicles so they state the proper amount of revenue from these transactions.

HB 5, sponsored by Rep. Peggy Hamric (Houston), increases the tax on the sale of tobacco products to raise additional revenue for property tax relief. Raising the tax to $1 per pack could bring an estimated $623 million to the state in 2007.

HB 2, sponsored by Rep. Jim Pitts (Waxahachie), dedicates all the revenue raised by other measures to school district property-tax relief.

These bills, which ultimately passed the House and Senate, all incorporate different aspects of the Texas Tax Reform Commission's legislative recommendations. To learn more about the plan’s specifics, we invite you to review its highlights or download the Texas Tax Reform Commission’s report, Tax Fairness: Property Tax Relief for Texans. You may also want to peruse our list of FAQs on this site.