84(R) - 2015
House Ways & Means
House Ways & Means
Relating to the sale of a new motor vehicle to certain manufacturers or distributors; imposing a tax.
A fiscal note dated April 10, 2015 indicates that depending upon the number of vehicles that may be purchased and subject to the use tax, there would be an indeterminate revenue impact to the state.
House Bill 2400 would amend Chapter 152 of the Tax Code concerning State taxes on sale, rental, and use of motor vehicles. It would modify the definition of "retail sale" in Section 152.001 (2) by adding an exception. Sales of new motor vehicles to a manufacturer or distributor for the purpose of resale or to attach a manufacturer's license plates to them, would not be considered "retail sales" and hence no retail sales tax would be imposed on them.
House Bill 2400 would also create a $25 use tax for any person issued a manufacturer's plate authorized by Chapter 503 of the Transportation Code.
Senate Bill 1125 is similar to HB 2400 but not identical.
Vote Recommendation Notes
The bill has been amended since we reported on it. The provision that would create a $25 use tax for any person issued a manufacturer's plate authorized by Chapter 503 of the Transportation Code has been removed. Due to this change, we have moved from neutral to support.
First chamber analysis below:
Sales of new motor vehicles to a franchised dealer for resale or attachment of dealer's or manufacturer's license plates, sales of vehicles other than new motor vehicles to a dealer for resale or attachment of dealer's or manufacturer's license plates, or sales to a franchised dealer of a new motor vehicle removed from the franchised dealer's inventory for lease, are already excluded from the State motor vehicle sales tax under Chapter 152 of the Tax Code.
House Bill 2400 would add to this list the cases of new motor vehicles sold between a manufacturer's own divisions, or to a distributor, for resale or attachment of manufacturer's license plates.
This provision of House Bill 2400 would foster a limited government by making sure that, in such sales cases, there is no instance of double taxation, since the sales tax is to be applied only to the final, retail sale.
Another provision of House Bill 2400 would impose a $25 use tax for the issuance of a manufacturer's plate. While this tax already exists for the issuance of a metal dealer's plate, this tax is likely to be passed to final buyers of cars, who will also pay a sales and use tax on the purchase of the vehicle. A better solution would have been to repeal the use tax on the issuance of metal dealer's plates.
Because of the mix of good and bad provisions in House Bill 2400, we will remain neutral.
NOTE: We supported a similar bill, SB 1125, which did not seek to create a new use tax as would HB 2400.