84(R) - 2015
House Ways & Means
House Ways & Means
Relating to an exemption from the sales and use tax for tangible personal property sold to or used by certain state data center services providers.
A fiscal note dated April 27, 2015 anticipates a negative, two-year net impact to General Revenue Related Funds of $10,900,000 through the biennium ending August 31, 2017.
There would be a proportional loss of sales and use tax revenue from local taxing jurisdictions.
House Bill 3304 would amend Chapter 151 of the Tax Code related to the sales and use tax and create a section regarding state data center services providers.
For the purpose of this section, House Bill 3304 would define a "data center services program" as the program operated by the Department of Information Resources to provide fully managed server, mainframe, and bulk print and mail services, and a "state data center services provider" as a person with which the Department of Information Resources contracts to provide hardware, software, tools, or technical staff to state agencies or for state agency use under the data center services program.
House bill 3304 would exempt from the sales and use tax tangible personal property sold to or used by a state data center services provider if it is sold on behalf of a state agency and is used by the state agency by the state data center services provider to provide services to the state agency under the data center services program.
Vote Recommendation Notes
According to the statement of purpose for House Bill 3304, "the Department of Information Resources manages the data center services program that utilizes the state's purchasing power to lower costs for state agencies purchasing hardware or software. The comptroller of public accounts has determined that purchases made through the program are subject to sales and use taxes, raising the cost of agency purchases that would otherwise not be subject to the tax if purchased directly by the agency."
House Bill 3304 would exempt those purchases from the sales and use tax as a solution.
Although we do not support exemptions for particular groups or people or businesses, in that case, the taxation of these purchases would be passed on to all taxpayers ultimately through an increase of government spending. As a consequence, we support House Bill 3304.