84(R) - 2015
House Ways & Means
House Ways & Means
Relating to an exemption from the motor vehicle sales and use tax for certain military servicemembers serving on active duty.
A fiscal note dated April 13, 2015 anticipates a negative two-year net impact to General Revenue Related Funds of $3,198,000 through the biennium ending August 31, 2017, if the effective date of the bill is July 1, 2015; or a negative impact of $3,007,000 through the biennium ending August 31, 2017, if the effective date of the bill is September 1, 2015.
House Bill 682 would amend Chapter 152 of the Tax Code regarding taxes on sale, rental, and use of motor vehicles to add another exemption for active duty military service members.
The taxes under chapter imposed by Chapter 152 would not apply to the sale or use of a motor vehicle purchased by an active duty member of the United States armed forces for the member’s own private use if the member is a resident of the state of Texas and is deployed outside the United States.
A member who is eligible would have to apply to the comptroller for a certificate stating that the member is exempt from the taxes imposed by this chapter.
House Bill 682 would apply only to the purchase of a motor vehicle on or after the effective date of this legislation.
Vote Recommendation Notes
House Bill 682 would exempt certain American military members from the motor vehicle sales and use tax on the purchase of a motor vehicle when they are resident of Texas and deployed outside the United States.
While we could support an exemption from the use tax since a military member deployed abroad will not be able to use a purchased motor vehicle, and we are deeply appreciative for the service men and women in the military dedicate to their country, exemptions for specific groups of people (or businesses) tend to distort the free market by favoring these specific groups above others, and unintended consequences soon appear (such as the one Senate Bill 1368
is trying to correct).
At the same time, exemptions exist for other groups of people or vehicle, including an exemption motor vehicle sales or use tax on any motor vehicle purchased in Texas or brought into Texas while stationed in Texas for Foreign military personnel, their dependents, and military-employed foreign civilians, if attached to a member of NATO and stationed in Texas (Rule §3.68, Chapter 3, Texas Administrative Code).
A low, broad based tax system is a transparent, efficient tax system that will not encourage people to look for ways to escape it. Exemptions, as they multiply, not only allow government to pick and choose who should or should not pay certain taxes, but they also complicate the tax system, hence make it more abstruse, increase the scope of government, and encourage people to look for loopholes and way to shift the burden of taxes on others.
Because House Bill 682 could have conflicting consequences regarding our Liberty Principles, we will remain neutral.