84(R) - 2015
Relating to the taxation of fireworks.
A fiscal note dated March 2, 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.
Senate Bill 761 would repeal the 2-percent fireworks tax (Chapter 161) that is levied on the sale at retail of fireworks. The revenues from the collection of this 2-percent tax go to the rural volunteer fire department insurance fund. Senate Bill 761 would require that an amount equal to the former revenue of the repealed tax would be taken from the collection of the sales tax (Chapter 151) on fireworks and be deposited to the credit of the rural volunteer fire department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.
Senate Bill 761 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.
The second chamber sponsor is Representative Jim Murphy.
Vote Recommendation Notes
No amendments or modifications have been made to the bill since we reported on it. We continue to support it.
First chamber analysis below:
Collecting taxes, as well as auditing and enforcement activities, cost money to the Comptroller's office and consequently to taxpayers. When a tax is not bringing significant revenues that offset the costs to taxpayers of collecting it, the tax should be repealed.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 better used.
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 and thus the ending this instance of double taxation, the repeal of this tax would favor a more efficient, limited government. We support Senate Bill 761.