84(R) - 2015
House Ways & Means
House Ways & Means
Relating to the taxation of fireworks.
A fiscal note dated March 29, 2015 anticipates a two-year net negative impact to General Revenue Related Funds of $2,930,000 through the biennium ending August 31, 2017.
The fiscal note adds that the Comptroller's Office has indicated that the repeal of the fireworks tax, along with the repeal of taxes on inheritance, controlled substances, oil regulation, sulphur, and liquified gas, would allow to the state to redeploy resources to audit and enforcement activities for other sources of revenue. It is expected that redeploying these resources would offset the loss of revenue from repealing the fireworks tax.
Fireworks are currently taxed under Chapter 151 (Limited Sales, Excise, and Use Tax), and under Chapter 161 (Fireworks Tax) of the Tax Code.
House Bill 2113 would repeal the 2-percent fireworks tax (Chapter 161) that is levied on the sale of retail of fireworks. The revenues from the collection of this 2-percent tax go to the Rural Volunteer Fire Department Insurance Fund. House Bill 2113 would require that an amount equal to the former revenue of the repealed tax be taken from the collection of the sales tax (Chapter 151) on fireworks and be deposited to the credit of the Rural Volunteer Fire Department Insurance Fund.
House Bill 2113 would also require that the costs to administer the Rural Volunteer Fire Department Insurance program during a state fiscal year not exceed 7 percent of the total amount deposited to the credit of the fund.
Vote Recommendation Notes
Collecting taxes, as well as auditing and enforcement activities, costs the Comptroller's office and, consequently, the taxpayers. When a tax is not bringing in significant revenue to offset the cost to taxpayers of collecting it, then the tax should be repealed. The Comptroller's Office has indicated that the resources that are currently being used to collect the fireworks tax could be put to better use.
The current law allowing for a special fireworks tax in addition to the regular sales tax is, effectively, a case of double taxation. By eliminating the special fireworks tax would end this instance of double taxation and favor a more efficient, limited government. We support House Bill 2113.
We also supported the Senate companion bill, SB 761, earlier this session.