84(R) - 2015
House Ways & Means
House Ways & Means
Relating to an exemption from and a limitation on the sales tax imposed on certain boats and boat motors.
A fiscal note dated April 6, 2015 anticipates a negative two-year net impact to General Revenue Related Funds of $3,550,000 through the biennium ending August 31, 2017.
House Bill 619 would amend Chapter 160 of the Tax Code related to taxes on sales and use of boats and boats motors.
It would provide that the sales and use tax does not apply to the sale of a taxable boat or motor if they are sold in Texas for use in another state or nation and are removed from Texas not more than 10 days after the date of purchase. The sales and use tax would also not apply to a boat or motor sold in Texas for use in another state or nation, that would also be docked at or placed in a boat repair facility registered with the comptroller for repairs or modifications not later than the 10th day after the date it was purchased, it's not used while being repaired instead for test on the repairs and modifications, and is removed from Texas not later than 20 days after repairs or modifications are finished.
The comptroller would have to adopt rules and procedures to implement these exemptions.
Additionally, House Bill 619 would limit the amount of the retail sales tax imposed on every retail sale of a taxable boat or motor to $15,625.
Vote Recommendation Notes
House Bill 619 would exempt from the sales and use tax the purchase of boats or motors that are not to remain in Texas any longer than 10 days.
Because the boat or motor will not be used in the state, and is likely to be taxed when brought to another state or nation, House Bill 619 encourages purchasers of boats and motors to complete their purchase in Texas (instead of where they ultimately plan to bring the boat or motor) without the risk of being taxed in Texas.
We like that the limitation on the maximum amount of retail sales tax is also broad-based -- affecting every retail purchase of a taxable boat or motor in Texas (not a specific type of vessel or marine engine).
But we do not support tax exemptions that favor specific groups of people or businesses. Though it may boost boat sales in Texas, this bill would create an un-level playing field and various unintended economic consequences both here and elsewhere. We also do not feel that it is the job of our legislators to compensate for the tax policies of other states and countries. As a consequence, we oppose HB 619 because it does not support a free (and fair) market.