Bill Text: TX HB3770 | 2021-2022 | 87th Legislature | Introduced


Bill Title: Relating to the repeal of or limitations on certain state and local taxes, including ad valorem taxes, the enactment of state and local value added taxes, and related school finance and administration reform; imposing taxes.

Spectrum: Partisan Bill (Republican 8-0)

Status: (Introduced - Dead) 2021-03-22 - Referred to Ways & Means [HB3770 Detail]

Download: Texas-2021-HB3770-Introduced.html
  87R2877 BEF/MEW/TJB-F
 
  By: White H.B. No. 3770
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the repeal of or limitations on certain state and local
  taxes, including ad valorem taxes, the enactment of state and local
  value added taxes, and related school finance and administration
  reform; imposing taxes.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
  ARTICLE 1. STATE VALUE ADDED TAX
         SECTION 1.01.  DEFINITIONS. In this article:
               (1)  "Input tax" means the aggregate amount of all
  state and local value added taxes imposed under this Act that have
  accrued with respect to services and property supplied to a
  taxpayer during a calendar quarter and used or held for use by the
  taxpayer in the ordinary course of the taxpayer's trade or
  business.
               (2)  "Output tax" means the aggregate amount of all
  state and local value added taxes imposed under this Act that have
  accrued with respect to services and property supplied by a
  taxpayer during a calendar quarter in the ordinary course of the
  taxpayer's trade or business.
               (3)  "Taxpayer" means a person on whom the value added
  tax is imposed.
               (4)  "Value added tax" means the tax imposed under
  Section 1.02 of this article.
         SECTION 1.02.  VALUE ADDED TAX IMPOSED. A value added tax is
  imposed on each person in this state who supplies any service or
  property in the ordinary course of a trade or business in which the
  person engages for profit.
         SECTION 1.03.  RATE OF TAX. The rate of the value added tax
  is 6.72 percent of the taxpayer's taxable receipts from the supply
  of services or property.
         SECTION 1.04.  DETERMINATION OF TAX PAYABLE. The total
  amount of state and local value added taxes under this Act payable
  by a taxpayer for a calendar quarter is the amount, if any, by which
  the taxpayer's output tax exceeds the taxpayer's input tax.
         SECTION 1.05.  EXEMPTIONS. (a) The comptroller by rule
  shall exempt from the value added tax:
               (1)  small businesses;
               (2)  governmental entities; and
               (3)  religious, educational, and public service
  organizations.
         (b)  The comptroller shall refund the amount of any input tax
  that has been accrued by an entity exempt under Subsection (a) of
  this section.
         SECTION 1.06.  EXCLUSIONS. The comptroller by rule shall
  exclude the following services and property from the value added
  tax:
               (1)  monetary instruments, financial assets, and
  investments;
               (2)  intercompany services;
               (3)  employment services;
               (4)  incidental transactions;
               (5)  transfers of common interests in property;
               (6)  services and property taxed by other law,
  including Chapters 201 and 202, Tax Code; and
               (7)  services and property this state is prohibited
  from taxing by federal law or the Texas Constitution.
         SECTION 1.07.  RULES. The comptroller shall adopt all rules
  necessary to implement, administer, and enforce the state value
  added tax and all local value added taxes under this Act.
         SECTION 1.08.  DISPOSITION OF REVENUE. All proceeds from
  the collection of the value added tax shall be deposited to the
  credit of the general revenue fund.
         SECTION 1.09.  EFFECTIVE DATE OF ARTICLE. This article
  takes effect January 1, 2026.
  ARTICLE 2. LOCAL VALUE ADDED TAXES
         SECTION 2.01.  LOCAL SALES AND USE TAXES PROHIBITED.
  Notwithstanding any other law, a political subdivision may not
  impose a sales or use tax on or after the effective date of this
  article.
         SECTION 2.02.  LOCAL VALUE ADDED TAXES. (a) A political
  subdivision that was authorized to impose a sales and use tax
  immediately before the effective date of this article may impose a
  local value added tax on and after the effective date of this
  article.
         (b)  A local value added tax is administered, collected, and
  enforced by the comptroller in the same manner as the state value
  added tax. The tax applies to the supply of services or property in
  the territory of the political subdivision.
         (c)  The comptroller shall allocate and remit to each
  appropriate taxing jurisdiction proceeds from the collection of
  local value added taxes by the comptroller.
         SECTION 2.03.  RATES OF LOCAL VALUE ADDED TAXES. (a) The
  combined rate of all local value added taxes may not exceed two
  percent at any location in the territory of a political
  subdivision.
         (b)  The maximum combined rate provided by Subsection (a) of
  this section does not apply to or include a school district
  enrichment value added tax under Article 3 of this Act.
         (c)  On the effective date of this article, a political
  subdivision may begin imposing the local value added tax at a rate
  not to exceed the rate at which the political subdivision imposed a
  sales and use tax immediately before the effective date of this
  article. Subject to Subsection (a) of this section, the governing
  body of a political subdivision that imposes a local value added tax
  may adopt an order or ordinance changing the rate of or repealing
  the tax imposed by the political subdivision.
         SECTION 2.04.  EFFECTIVE DATE OF ARTICLE. This article
  takes effect January 1, 2026.
  ARTICLE 3. SCHOOL DISTRICT ENRICHMENT VALUE ADDED TAX
         SECTION 3.01.  TAX AUTHORIZED. (a) A school district may
  adopt or repeal a school district enrichment value added tax at an
  election in which a majority of the qualified voters of the school
  district approve the adoption or repeal of the tax.
         (b)  A school district enrichment value added tax is
  administered, collected, and enforced by the comptroller in the
  same manner as the state value added tax. The tax applies to the
  supply of services or property in the territory of the school
  district.
         SECTION 3.02.  MAXIMUM RATE. The rate of the school district
  enrichment value added tax may not exceed 0.5 percent.
         SECTION 3.03.  USE OF TAX REVENUE BY SCHOOL DISTRICT. (a)
  Revenue from the school district enrichment value added tax is for
  the use and benefit of the school district. The revenue must be
  used exclusively for school enrichment facilities and activities
  and for the payment of the principal of and interest on debt
  incurred to fund school enrichment facilities and activities.
         (b)  Revenue from the school district enrichment value added
  tax may not be used for an expenditure or investment that is:
               (1)  necessary to comply with the legislature's duty
  under Section 1, Article VII, Texas Constitution, to provide for
  the general diffusion of knowledge and an efficient system of
  public schools, including by providing funding for instructional
  facilities; and
               (2)  eligible for funding through the Foundation School
  Program.
         SECTION 3.04.  PLEDGE OF REVENUE. A school district may
  pledge a portion of the revenue from the school district enrichment
  value added tax for the payment of obligations issued to pay all or
  part of the cost of a school enrichment project in the school
  district.
         SECTION 3.05.  EFFECTIVE DATE OF ARTICLE. This article
  takes effect January 1, 2026.
  ARTICLE 4. AD VALOREM TAXES
         SECTION 4.01.  PROHIBITION ON IMPOSITION OF AD VALOREM
  TAXES. (a) Notwithstanding any other law, a political subdivision
  may not impose an ad valorem tax for any purpose unless the
  legislature by law has, on or after January 1, 2023, specifically
  authorized the political subdivision to impose the tax. To the
  extent of a conflict, this section controls over a conflicting
  provision in a general or special law.
         (b)  The change in law made by this section does not affect
  tax liability accruing before the effective date of this section.
         (c)  This section takes effect January 1, 2026, but only if
  on or before that date a constitutional amendment to prohibit a
  political subdivision from imposing an ad valorem tax for any
  purpose unless the legislature by law has specifically authorized
  the political subdivision to impose the tax is approved by the
  voters. If such a constitutional amendment is not approved by the
  voters on or before that date, this section has no effect.
         SECTION 4.02.  REPORT. (a) The comptroller shall prepare a
  report that:
               (1)  recommends for each political subdivision
  authorized to impose an ad valorem tax whether the legislature
  should authorize the political subdivision to continue to impose
  the tax on and after January 1, 2026; and
               (2)  recommends any change in constitutional or
  statutory law needed to implement this Act.
         (b)  Not later than December 1, 2021, the comptroller shall
  prepare and make available to each political subdivision that
  imposes an ad valorem tax a form to be completed by the political
  subdivision to assist the comptroller in making the recommendations
  described by Subsection (a) of this section.
         (c)  Not later than February 1, 2022, each political
  subdivision authorized to impose an ad valorem tax shall complete
  and submit to the comptroller the form described by Subsection (b)
  of this section. A political subdivision must prepare and submit
  the form in the manner and format prescribed by the comptroller.
         (d)  On request of the comptroller, a political subdivision
  shall promptly provide information for and assistance in preparing
  the report under Subsection (a) of this section.
         (e)  Not later than December 1, 2022, the comptroller shall
  submit to the governor, lieutenant governor, speaker of the house
  of representatives, and members of the legislature the report
  required by Subsection (a) of this section.
         (f)  This section expires January 1, 2023.
         SECTION 4.03.  EFFECTIVE DATE OF ARTICLE. Except as
  otherwise provided by this article, this article takes effect
  September 1, 2021.
  ARTICLE 5. SCHOOL FINANCE
         SECTION 5.01.  FOUNDATION SCHOOL PROGRAM FUNDING. Beginning
  with the 2026-2027 school year, the legislature shall appropriate
  money to fund the Foundation School Program under Chapter 48,
  Education Code, in an amount, excluding money collected by a school
  district through the imposition of a tax, necessary to:
               (1)  comply with the legislature's duty under Section
  1, Article VII, Texas Constitution, to provide for the general
  diffusion of knowledge and an efficient system of public schools,
  including by providing funding for instructional facilities;
               (2)  achieve the state policy under Section 48.001,
  Education Code, and the purposes of the Foundation School Program
  under Section 48.002, Education Code;
               (3)  provide the basic allotment under Section 48.051,
  Education Code, in an amount of at least $6,160 per student in
  average daily attendance; and
               (4)  provide a minimal level of revenue to provide
  school districts an opportunity to pursue locally funded enrichment
  programs.
         SECTION 5.02.  IMPOSITION OF MAINTENANCE AND OPERATIONS AND
  DEBT SERVICE TAX BY SCHOOL DISTRICT PROHIBITED. (a)
  Notwithstanding any other law and except as provided by Subsection
  (b) of this section, a school district may not impose a tax for
  maintenance and operations or debt service purposes on or after
  January 1, 2026, unless specifically authorized by the legislature
  as provided by SECTION 4.01 of this Act.
         (b)  Subsection (a) of this section does not affect the
  authority of a school district to impose an enrichment value added
  tax at a rate not to exceed 0.5 percent in accordance with Article 3
  of this Act for the purpose of providing additional revenue to
  enrich the educational opportunities of students enrolled in the
  district. The revenue attributable to the tax authorized under
  this subsection is in addition to any money the district receives
  from the state.
         (c)  A reference in the Education Code, the Tax Code, or any
  other law to a school district's authority to impose a maintenance
  tax, a maintenance and operations tax, or a debt service tax may not
  be construed in a manner inconsistent with this section.
         SECTION 5.03.  STATE ASSISTANCE FOR TRANSITION TO SCHOOL
  DISTRICT ENRICHMENT VALUE ADDED TAX. (a) For purposes of
  budgeting, funding, and debt servicing, the commissioner of
  education shall assist school districts in transitioning from the
  use of maintenance and operations and debt service tax revenue to
  the use of state funding and enrichment value added tax revenue.
         (b)  Not later than March 1, 2026, each school district shall
  prepare and submit to the commissioner of education a transition
  report certified by the comptroller that provides for the following
  10 state fiscal years estimates regarding:
               (1)  budgets;
               (2)  sources of funding;
               (3)  debt service;
               (4)  operating and capital expenditures; and
               (5)  public bond offerings.
         (c)  In the transition report prepared under Subsection (b)
  of this section, a school district shall, in accordance with the
  policy and purposes described by Sections 48.001 and 48.002,
  Education Code, classify as "foundational" or "enrichment":
               (1)  each projected operating and capital expenditure
  and the proportion of each current and projected debt and debt
  service requirement; and
               (2)  the proportional amounts of current and projected
  debts and debt service requirements, based on the proposed uses for
  the revenue.
         (d)  Based on school districts' reports under Subsection (b)
  of this section, the commissioner of education shall prepare and
  present to the comptroller recommendations for refunding,
  redeeming, or amending outstanding bonds for which school districts
  pledged maintenance and operations or debt service tax revenue for
  payment.
         (e)  Notwithstanding any other law, the commissioner of
  education shall provide state funding for the payment of any bonds
  classified by a school district as a "foundational" bond under
  Subsection (c) of this section. A school district assumes full
  financial responsibility for any bond classified as an "enrichment"
  bond.
         (f)  The commissioner of education shall annually prepare
  and provide a report to the legislature and the comptroller
  regarding funding under the Foundation School Program and the
  transition by school districts to imposing a value added enrichment
  tax. The report must include recommendations for legislative
  action to facilitate the funding transitions required under this
  Act while maintaining and improving the efficiency, quality, and
  results of public education in this state.
         SECTION 5.04.  REPORT REGARDING SCHOOL DISTRICT
  REORGANIZATION. (a) As soon as practicable after the effective
  date of this article, the commissioner of education shall consult
  with school districts to develop recommendations regarding the
  reorganization of school districts with populations of 100,000 or
  more into smaller districts to promote increased community and
  parental engagement. The recommendations must include provisions
  for:
               (1)  preserving and promoting open-enrollment charter
  schools that attract students from broadly dispersed geographic
  areas; and
               (2)  organizing school districts based on geographic
  proximity, shared community ties and interests, and transportation
  patterns and limitations.
         (b)  Not later than September 1, 2025, the commissioner of
  education shall provide the legislature with a report containing
  the recommendations developed under Subsection (a) of this section.
         SECTION 5.05.  EFFECTIVE DATE OF ARTICLE. This article
  takes effect September 1, 2021.
  ARTICLE 6. REPEALED PROVISIONS
         SECTION 6.01.  TAX CODE. (a) The following provisions of
  the Tax Code are repealed:
               (1)  Chapter 142;
               (2)  Subtitles E, F, G, H, I, and J, Title 2; and
               (3)  Subtitle C, Title 3.
         (b)  The repeal of a provision by this section does not
  affect tax liability accruing before the effective date of this
  article. That liability continues in effect as if this article had
  not been enacted, and the former law is continued in effect for the
  collection of taxes due and for civil and criminal enforcement of
  the liability for those taxes.
         SECTION 6.02.  EDUCATION CODE. The following provisions of
  the Education Code are repealed:
               (1)  Section 45.0032;
               (2)  Chapter 46;
               (3)  Sections 48.255, 48.2551, 48.2552, 48.2553,
  48.256, 48.257, 48.258, 48.259, and 48.260;
               (4)  Sections 48.267(b) and (c);
               (5)  Sections 48.271 and 48.275; and
               (6)  Chapter 49.
         SECTION 6.03.  EFFECTIVE DATE OF ARTICLE. This article
  takes effect January 1, 2026.
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