Bill Caption

Relating to franchise tax, oil production tax, and gas production tax incentives for certain desalination facility operations.

Fiscal Notes

The fiscal implications of the bill cannot be determined at this time; however the bill could result in a negative fiscal impact depending on the extent of innovation in water desalination technology.

Bill Analysis

HB 2545 would provide for a temporary franchise tax credit for certain permit-holding desalination facilities that operate under the authority of the Texas Commission on Environmental Quality (TCEQ) or the Texas Railroad Commission (RRC). Eligible permit holders would be required to submit certain monthly statements to TCEQ. The bill prescribes in detail what must be included in the monthly statements. The franchise tax credit would expire December 31, 2024 unless extended by the legislature. 

Vote Recommendation Notes

Texas Action opposes HB 2545 for violating the principles of limited government and individual liberty. Tax credits for specific industries represent undue government interference in the marketplace, effectively picking winners and losers. Taxes, when necessary, should be applied in a broad-based and equal manner, so as to remain fair to all tax payers. 

We also note that although this tax credit has an expiration date, temporary tax credits and tax exemptions have a strange way of becoming permanent by continually being extended when the expiration deadline nears.