84(R) - 2015
Relating to exempting emergency preparation supplies from the sales and use tax for a limited period.
A fiscal note dated April 20, 2015 anticipates a two-year negative net impact to General Revenue Related Funds of $2,250,000 through the biennium ending August 31, 2017.
Senate Bill 904 would create a tax-free weekend for certain emergency preparation supplies, listed in the bill, if these products are sold during a period beginning at 12:01 a.m. on the Saturday before the last Monday in April and ending at 12 midnight on the last Monday in April.
The second chamber sponsor is Representative Drew Darby.
Vote Recommendation Notes
No amendments or modifications have been made to the bill since we reported on it. We continue to oppose it.
First chamber analysis below:
Senate Bill 904 would exempt certain emergency preparation supply items from the sales and use tax over a weekend at the end of the month of April.
The goal would be to encourage Texans to prepare for the upcoming storm and hurricane season by buying supplies that could protect them and their property better, and to raise awareness about the importance of preparation and mitigation.
Although Senate Bill 904 is well intended and has the potential to help people save money, not just thanks to the tax-free weekend, but because good preparation and mitigation can save people money in the event of a storm, tax-free holidays have the potential to cause unintended consequences by distorting the market.
It should also be pointed out that consumers are not actually guaranteed savings under these tax holiday schemes. There is nothing preventing merchants from raising prices by the amount that would have been reduced at the register through the tax break. Furthermore, prices can rise due to supply and demand issues created when people rush to purchase tax-exempt goods. Either or both of these factors can lead to consumers actually paying more than they would have if the government had avoided tinkering in the marketplace to begin with.
Generally low taxes during the whole year encourage people to look for the best way for them, all year long, to address issues such as preparation and mitigation in case of a natural disaster. As a consequence, we cannot support Senate Bill 904.