Subscribe to receive our Floor Reports covering all the action on the Texas House and Senate floor!
This bill has a negative impact of $62,600,000 on the State through the biennium ending August 31, 2017. The Comptroller has estimated the bill would result in revenue losses for certain local entities. According to the Comptroller, counties and special districts are estimated to lose $1,100,000 in revenue per year. Municipalities are anticipated to lose $5,800,000 in revenue per year and local Transit Authorities are estimated to lose $2,000,000 in revenue per year.
HB 2358 would add an additional chapter to the Business & Commerce code entitled “Facilitating Business Rapid Response to State Declared Disasters Act.” This chapter would allow an out-of-state business entity whose work is limited to the performance of a disaster or emergency-related work during a disaster response would not be required to; (1) register with the secretary of state, (2) file a tax report with or pay taxes or fees to Texas, (3) pay an ad valorem tax or use tax on equipment that is brought into the state by the entity, (4) comply with any state or local business licensing or registration requirement, and (5) comply with any state or local occupational licensing requirements. Similar exemptions are entitled to out-of-state employees working in a disaster or emergency related situations.
These employees are not required to (1) file a tax report with, pay taxes, or fees to this state or a political subdivision of this state, or (2) comply with any state or local occupational requirements. However, the secretary of state may request verification if the duties of the business or employee are actually disaster related. If a business or an employee remains in the state after the disaster, they are no longer entitled to these special exemptions.
This bill would also amend the chapter entitled “Limited Sales, Excise, and Use Tax” from the Tax Code to reflect the newly created chapter related tax exemptions. The final chapter amended within the Tax Code would be the “Franchise Tax,” which would also allow a tax exemption related to disaster relief.
The purpose of this bill is to enable out of state people and businesses to assist in response to a disaster in the state of Texas without fear of falling afoul of Texas occupational licensing and taxation laws. Usually when a disaster strikes that is significant enough for the President of the United States or a state governor to declare a state of disaster or emergency, people from neighboring states rush in to lend a hand with rescue, recovery, and cleanup efforts. This is commonly seen in the aftermath of hurricanes, tornadoes, massive flooding, or acts of terrorism.
People from other states who wish to help in the event of a state of emergency or disaster in Texas should not have to wonder whether their assistance will lead to tax or legal burdens in Texas. This bill would prevent that from happening.
In general we oppose special preferential tax treatment which benefits a particular business or industry over other competitors in the marketplace. Such exemptions lead to distortions in the marketplace and have unintended consequences. That is not the case with this bill.
This bill is narrowly crafted with terms that are well defined to allow out-of-state businesses to give support during Texas’ time of need without needing to first overcome burdensome regulatory and taxation barriers that would make it difficult or impossible to render assistance in a timely manner. This legislation supports limited government, personal responsibility, and individual liberty. We support HB 2358.