84(R) - 2015
House Ways & Means
House Ways & Means
Relating to the sales and use tax exemption for the repair, remodeling, or maintenance of aircraft.
A fiscal note dated April 15, 2015 anticipates a negative two-year net impact to General Revenue Related Funds for CSHB 1458 of $10,300,000 through the biennium ending August 31, 2017.
The fiscal note adds that there would be a proportional loss of sales and use tax revenue from local taxing jurisdictions.
House Bill 1458 would amend Section 151.328 of the Tax Code related to exemptions from the sales tax for certain aircrafts, to extend some exemptions.
House Bill 1458 would exempt repair, remodeling, and maintenance services to all aircraft (as opposed to those operated by certain persons, currently) from the sales and use tax.
It would also exempt from the sales and use tax machinery, tools, supplies, and equipment used or consumed exclusively in the repair, remodeling, or maintenance of aircraft, aircraft engines, or aircraft component parts, as well as tangible personal property that is permanently affixed or attached as a component part of an aircraft for all aircraft (as opposed to those operated by certain persons, currently).
Vote Recommendation Notes
The aircraft industry already benefits from certain sales and tax exemptions (Section 151.328, Tax Code). As the statement of purpose for the bill states, there already exists certain sales and tax exemptions to certain aircrafts for parts and labor. House Bill 1458 would extend these exemptions. The stated aim of the bill is to encourage the expansion of the aviation industry in Texas.
The role of government is not to encourage the expansion or growth of an industry, especially if this means giving out tax favors here and there, to specific groups of people or businesses. These exemptions make the tax code more opaque and less understandable for taxpayers, they encourage taxpayers to ask for favors for their particular interest group (or to find loopholes), but more importantly, they distort the free market system and create unintended consequences. Because of that, we cannot consistently support tax exemptions for one specific industry. We oppose House Bill 1458.