HBA-NLM, LCA H.B. 175 76(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 175
By: Chavez
Ways & Means
4/13/1999
Introduced



BACKGROUND AND PURPOSE 

Chapter  151, Tax Code (Limited Sales, Excise, and Use Tax), was amended in
1997 by the 75th Legislature to require that exempt items under Section
151.318 (Property Used in Manufacturing) make a physical or chemical change
to a final product.  This modification was intended to apply to
manufactured items, but has produced uncertainty in the film industry,
often leading filmmakers to other states to make their films.   

To promote the continued development of the film and video industry in
Texas, H.B. 175 amends the Tax Code to specify that film production is
considered manufacturing, and includes specific machinery and motor
vehicles and equipment used in production under the exemption.  

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Chapter 151, Section 151.318, Tax Code, as follows:

 Sec. 151.318.  PROPERTY USED IN MANUFACTURING.  (b) Adds a sales tax
exemption for the production for consideration of a motion picture or video
or  audio recording, a copy of which is sold or offered for sale, licensed,
distributed, broadcast, or otherwise exhibited, considering these
activities to be "manufacturing" for the purposes of this section. Requires
that an exemption applies towards machinery and motor vehicles and
equipment rented or purchased for the production. Makes nonsubstantive
changes. 

(c) Creates Subdivision (3) from existing Subdivision (4). Deletes former
Subdivision (c)(3) to eliminate "hand tools" as equipment that is not
exempted. (Does not indicate a redesignation for Subdivision (5)). Makes a
conforming change.  

(p) Redesignated from existing Subsection (q). Deletes existing Subsection
(p) which contained the language added by that Act in Subsection (b)(3). 

SECTION 2.   Effective date: September 1, 1998.

SECTION 3.  Emergency clause.
  Effective date: upon passage.