84(R) - 2015
House Ways & Means
House Ways & Means
Relating to the sales and use taxation of certain cleaning services in a licensed health care facility.
A fiscal note dated May 9, 2015 anticipates a negative two-year net impact to General Revenue Related Funds from CSHB 3049 of $2,980,000 through the biennium ending August 31, 2017, if the bill takes immediate effect, or a negative impact of $2,650,000 through the biennium ending August 31, 2017, if the effective date of the bill is September 1, 2015.
There would be a proportional loss of sales and use tax revenue from local taxing jurisdictions.
House Bill 3049 would amend Chapter 151 of the Tax Code relating to the sales and use tax to add an exemption for cleaning, janitorial, or custodial services performed inside a health care facility, as defined by Section 108.002 of the Health and Safety Code, as well as for cleaning patient care equipment, tools, or devices.
Vote Recommendation Notes
House Bill 3049 would exempt from the sales and use tax certain cleaning services when performed inside a health care facility. It would hence exempt a select group of businesses in a particular industry.
According to the statement of purpose for the bill, the comptroller has determined that some cleaning services are not janitorial services and no tax is due on charges to sanitize rooms and equipment used in meat processing, for example. The bill aims at making sure specialized cleaning services that hospitals and similar treatment facilities use are not considered taxable cleaning services.
But this would still create a sales and use tax exemption for a select type of service that is substantially similar to janitorial service while still leaving in place the sales and use tax on janitorial services.
Government-created "advantages," even when well intentioned, tend to more often than not come with unintended consequences by distorting the market. The role of government is not to decide which industry or group of businesses within an industry should pay or not a tax. House Bill 3049 would extend the scope of government. As a consequence, we oppose House Bill 3049.