84(R) - 2015
Relating to the exemption from ad valorem taxation of income-producing tangible personal property having a value of less than a certain amount.
A fiscal note dated March 1, 2015 anticipates a two-year negative net impact to General Revenue Related Funds of $403,000 through the biennium ending on August 31, 2017. The impact would increase to a negative $4,163,000 for the biennium ending on August 31, 2019.
The fiscal note indicates that the increase in the exemption of tangible personal property held or used for the production of
income valued from $500 up to but not including $2,500 would create a cost to school districts,
other local taxing units, and to the state through the operation of the school funding formula.
Senate Bill 762 would increase the minimum taxable value under which a tangible personal property used to produce income would be exempt from taxation under Chapter 11 of the Tax Code.
Vote Recommendation Notes
Under Article VIII, Section 1(g) of the Texas Constitution, "the Legislature may exempt from ad valorem taxation tangible personal property that is held or used for the production of income and has a taxable value of less than the minimum amount sufficient to recover the costs of the administration of the taxes on the property, as determined by or under the general law granting the exemption."
The intent of Senate Bill 762 is to increase in statute the property exemption to the minimum value under which the cost to appraise and assess taxes due on tangible personal property is higher than the revenue due on the property. The current minimum value of $500 has not been changed since 1995. Senate Bill 762 would raise it to $2,500. Ultimately, money could be saved by appraisal districts that would be able to concentrate their resources on properties that generate greater revenues.
This common sense measure would also have the benefit of bringing additional tax relief to small businesses. Senate Bill 762 would hence benefit the free market system and would encourage a limited government. We support Senate Bill 762.