HB 317

83(R) - 2013

Vote Recommendation

  • Positive
  • Neutral
  • Neutral
  • Positive
  • Neutral


John Otto

Bill Caption

Relating to the classification of certain entities as primarily engaged in retail trade for purposes of the franchise tax.

Fiscal Notes

Estimated Two-year Net Impact to General Revenue Related Funds for HB317, As Introduced: an impact of $0 through the biennium ending August 31, 2015. Additionally, the bill will have a direct impact of a revenue loss to the Property Tax Relief Fund of ($5,411,000) for the 2014-15 biennium. Any loss to the Property Tax Relief Fund must be made up with an equal amount of General Revenue to fund the Foundation School Program.

Bill Analysis

Summary: HB 317 expands the definition of “retail trade” to include “rental purchase agreement activities regulated by Chapter 92, Business and Commerce Code.” Essentially, HB 317 seeks to define rent-to-own stores as retail trade under Franchise Tax code so they can be taxed at the .5% rate applied to normal retail businesses, instead of the 1% rate applied to entities that are not considered to be retail entities. These stores sell the same goods as traditional retailers but allow consumers to pay for goods in installments, while letting consumers obtain the good immediately.

If HB 317 passes and these rental purchase agreement stores are taxed at .5% instead of 1%, the Legislative Budget Board predicts a cost in revenue of $5.4 million to Texas’ Property Tax Relief Fund. Such a reduction would have to be accompanied by an equal contribution of General Revenue dollars to Texas’ Foundation School Program.

Analysis: HB 317 would result in rent-to-own stores being taxed at the same, lower rate as other retailers. Aside from the fact that consumers of rent-to-own products pay in installments instead of all at once, there is no appreciable difference between rent-to-own stores and other retailers that sell consumer goods. HB 317 decreases government regulation by removing an arbitrary distinction that has contributed to Texas’ unfair tax system. Despite the fact that tax revenue will be lost, HB 317 is needed to ensure equal tax treatment for similar businesses under Texas’ Franchise Tax.

We encourage legislators to support HB 317.