HB 423

85(R) - 2017
House Ways & Means
House Ways & Means

Vote Recommendation

  • Negative
  • Neutral
  • Neutral
  • Negative
  • Neutral


John Wray

Bill Caption

Relating to the computation of cost of goods sold for purposes of the franchise tax by taxable entities that transport ready-mixed concrete.

Fiscal Notes

Estimated Two-year Net Impact to General Revenue Related Funds for HB423, Committee Report 1st House, Substituted: an impact of $0 through the biennium ending August 31, 2019.

However, the bill will have a direct impact of a revenue loss to the Property Tax Relief Fund of ($2,160,000) for the 2020-21 biennium.  Any loss to the Property Tax Relief Fund must be made up with an equal amount of General Revenue to fund the Foundation School Program.

Bill Analysis

Under current law, certain businesses are exempt from including distribution or rehandling costs in calculating the business’ costs of goods sold when filing franchise taxes.


HB 423 would amend current Tax Code by exempting business entities that transport ready-mixed concrete. The business would not be required to own the ready-mixed concrete in order to subtract the costs from the calculation of cost of goods distribution costs for franchise tax purposes.

Vote Recommendation Notes

Specialized tax exemptions designed to benefit one type of product or service are a form of government intervention in the marketplace. Picking winners and losers in the marketplace through preferential tax treatment violates the principles of free markets and limited government, therefore we oppose HB 423.

On a related note, we have supported other legislation this session to phase out the franchise tax completely over time which would benefit all taxpayers instead of the privileged few who are beneficiaries of special exemptions.

Organizations Supporting

National Federation of Independent Business
Texas Association of Business