SB 1356

84(R) - 2015
Senate Finance
Senate Finance

Vote Recommendation

  • Negative
  • Neutral
  • Neutral
  • Negative
  • Neutral


Juan "Chuy" Hinojosa

Bill Caption

Relating to exemption from the sales tax for certain water-efficient products for a limited period.

Fiscal Notes

A fiscal note dated April 6, 2015 anticipates a two-year negative net impact to General Revenue Related Funds of $4,290,000 through the biennium ending August 31, 2017.

Bill Analysis

Senate Bill 1356 would create a sales tax holiday weekend for "WaterSense products." Products designated as WaterSense certified products would be exempt from the sales and use tax if the products are sold during a period beginning at 12:01 a.m. on the Saturday preceding the last Monday in May (Memorial Day) and ending at 11:59 p.m. on the last Monday in May.

The second chamber sponsor is Representative Drew Darby.

Vote Recommendation Notes

5/20/15 Update:

No amendments or modifications have been made to the bill since we reported on it. We continue to oppose it.

First chamber recommendation:

Some energy-efficient products, Energy Star qualified products under the Energy Star program jointly operated by the United States Environmental Protection Agency (EPA) and the United States Department of Energy, already benefit from a tax-free weekend during Memorial Day weekend (Section 151.333 of the Tax Code).

WaterSense certified products are products certified under the WaterSense program operated by the EPA.

We understand that the intent of the bill is to encourage Texans to buy water-efficient products that would reduce their consumption of water in a period of drought. But despite its good intention, Senate Bill 1356 would favor a particular category of water-efficient products - products certified by a particular EPA program, over any other water-efficient product, and over other products overall during the time of a weekend. Such favors create distortions and impede the free market system.

It should also be pointed out that consumers are not actually guaranteed savings under these tax holiday schemes. There is nothing preventing merchants from raising prices by the amount that would have been reduced at the register through the tax break. Furthermore, prices can rise due to supply and demand issues created when people rush to purchase tax-exempt goods. Either or both of these factors can lead to consumers actually paying more than they would have if the government had avoided tinkering in the marketplace to begin with.

The role of government is not to favor a category of products to further a cause or goal. Generally low taxes during the whole year encourage people to look for the best way for them, all year long, to address issues such as the need to reduce their water consumption. As a consequence, we cannot support Senate Bill 1356.