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Summary: HB 697 would exempt certain products and entities associated with schools from a sales and use tax imposed by Chapter 151, Tax Code. HB 697 would exempt booster clubs or other school support organizations from paying a sales and use tax on food products, candy, meals and soft drinks at an elementary school during the school day if the sales do not benefit an individual. This sales and use tax would also not apply to any of these products if sold during a school event at a concession stand operated by a booster club or other school support organization formed to support the school or school district, if the proceeds benefit the school or school district. HB 697 also extends this sales and use tax exemption to “school spirit” merchandise sold by a booster club or school support organization if the proceeds benefit the school or school district, and are sold under a proper agreement with school authorities and sold a concession stand operated by a booster club or other school support organization during an event held by an elementary school, secondary school, or school district.
Analysis: HB 697 expands the practice of doling out tax exemptions, making Texas’ tax code even more complicated. The exemption’s for this sales tax are unfortunate because a broad based, low rate sales tax that is applied to every Texan, without exemption, would make for a simple, fair tax system. The reality is, however, that Texas’ system is wrought with different forms of taxation, and is far from simple and fair.
Still the exemptions for products sold by booster clubs and other school organizations at school events, including school spirit merchandise, simply clarify existing law that already exempts products sold at school events from sales and use taxation. Legislators should know, however, that doling out exemptions is a slippery slope that leads to an unfair and complicated system.
Since this practice is already in law, and since having to force entities involved with school sales to tax some goods at a school event and not others, HB 697 is a good bill that clarifies what school concession stands can do under tax law. We support HB 697 because it clarifies how schools and associated school organizations can operate under current tax law.
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