On March 11, the House Research Organization (HRO) published a report which examines the major sources of state tax revenue and surveys proposals to generate more.
Some of the fees discussed in HRO publication are as follows:
Sales and use taxes
The Comptroller’s Office, in its February 2011 Tax Exemptions and Tax Incidence report, estimates that sales-tax exemptions, exclusions, and discounts amount to a total of $30.8 billion in potential revenue in fiscal 2011.
Most state efforts to increase sales-tax revenue focus on improving collections or removing exemptions. Efforts to improve collections include closer scrutiny of sales-tax refunds, eligibility for exemptions, and applications for refunds on taxes collected on items meant for tax-free exports.
Internet sales
According to the comptroller, if Texas joined the Streamlined Sales Tax Project and Congress authorized states to require sellers to collect taxes on remote sales, the state could collect another $500 million annually.
Retail sales tax remittance
According to the LBB’s Texas State Government Effectiveness and Efficiency report, Texas could save $81.2 million in general revenue funds in fiscal 2012-13 by increasing from .05 to .75 the percentage of sales taxes retailers may retain in return for timely filing their taxes, while limiting the total amount a business may retain to $3,750 per tax year. The LBB also calculates that the state could receive an additional $70.8 million by limiting the amount of tax a retailer may retain in exchange for remitting sales taxes to the state in advance.
Sales tax holiday
The LBB also recommends making the August state sales-tax holiday conditional on budget conditions. Suspending the August sales tax holiday would be expected to provide Texas with $14.4 million (FY11) in fiscal 2011 and $97.3 million in fiscal 2012-13.
Surcharge on vehicle sales
The LBB, in its Efficiency report, proposed a fuel inefficiency surcharge of $100 on the sale of a vehicle with high emissions as determined by federal fuel economy standards. Imposing this surcharge, the LBB estimates, would raise $115.3 million* in general revenue funds during fiscal 2012–13. (*biennium)
Registration and other fees
The 82nd Legislature may consider proposals to increase motor vehicle registration fees. According to an estimate from the Texas Transportation Institute (TTI), a $25 annual increase in the vehicle registration fee would generate another $623 million in annual revenue, which could be leveraged to secure about $8.3 billion in transportation bonds. A $35 increase in the fee would bring another $873 million, and an increase of $50, another $1.2 billion.
In its Efficiency report, the LBB proposed restructuring the highway maintenance fee that the state levies — in addition to the special vehicle registration fee — on oversize and overweight vehicles. The LBB suggests these fees could be restructured to generate an additional $6 million in revenue, a 10 percent increase.
Traffic fines
In its Efficiency report, the LBB proposed increasing the state traffic fine from $30 to $45 for each person found guilty of committing a traffic violation. The LBB estimates this would generate $85 million* in general revenue and general revenue-dedicated funds for fiscal 2012-13. (*biennium)
Business margins tax
According to studies by the comptroller’s business tax advisory commission, the tax is bringing in less revenue because more businesses than anticipated are calculating it using total revenue minus cost of goods sold.
Proposals to change the margins tax include clarifying what can and cannot be claimed under the various exemptions, increasing the rates on which the margin is taxed, and expanding the types of business entities required to pay the tax.
Proposals to abolish refunds and exemptions
One proposal would abolish a refund that was established in 1995 to reimburse companies after the state repealed property tax abatements the companies were receiving from local school districts. The Legislature never ended the refund program, and many companies continue to apply for and receive the refund even though they never received the original school property-tax abatement. This change would save the state an estimated $20 million in avoided property tax refund payments to businesses.
Buildings
Some states and cities around the country are selling or leasing public assets to augment decreased tax revenues. Both the House and the Senate base budget proposals and the governor’s proposed budget assume the sale of the Texas Department of Criminal Justice’s Central Unit in Sugarland to private developers for about $33.5 million.
The Texas Facilities Commission has taken the opposite approach in the long term, with plans to invest in and expand state assets, such as state-owned office buildings and office parks. The commission is considering consolidating state offices into large office parks similar to the capitol complex, predicting the state would see large savings over time by avoiding rental and lease costs for office space.
Gaming at tracks
Another proposal would allow video lottery terminals (at certain locations), which are gaming machines similar to a traditional slot machine, only at Texas racetracks and on the land of Texas’ three federally recognized Native American tribes. This proposal could generate about $825 million for the state in fiscal 2012- 13, with about $225 million coming from up-front fees and $600 million from tax revenue, according to Win for Texas, a coalition of racing industry groups and others.
To see all fees proposed and further details, please visit: http://www.hro.house.state.tx.us/pdf/focus/Revenue82.pdf
