84(R) - 2015
Relating to the application of the motor vehicle sales tax to the sale of a new motor vehicle to certain manufacturers or distributors.
A fiscal note dated April 15, 2015 indicates that there could be an indeterminate change in motor vehicle sales tax collections depending on the number of vehicles sold to a manufacturer or distributor.
Senate Bill 1125 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.
Vote Recommendation Notes
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.
Senate Bill 1125 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.
As a consequence, Senate Bill 1125 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. We support Senate Bill 1125.