HBA-RBT H.B. 2413 76(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 2413 By: Hilbert Ways & Means 4/19/1999 Introduced BACKGROUND AND PURPOSE The ability to quickly and seamlessly communicate will drive economies in the 21st century. The transformation of the Texas economy from a manufacturing base to a service base increases the need for quality telecommunications. Businesses, governments, educational institutions, and hospitals now require modern telecommunication systems to compete in the global economy and provide essential services. Additionally, the telecommunications industry is creating jobs in Texas much more rapidly that predicted. Just four years after a Texas Workforce Commission study, the communications industry employs nearly as many employees as the Commission projected for the year 2005. By allowing a sales tax incentive for the purchase of telecommunications equipment Texas can ensure that it will remain competitive with other states and maintain and grow an industry vital to the state's future. H.B. 2413 exempts from sales taxes machinery, equipment operating software and replacement parts and accessories used to provide telecommunications service or Internet service. 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 Subchapter H, Chapter 151, Tax Code, by adding Section 151.3235, as follows: Sec. 151.3235. CERTAIN TELECOMMUNICATIONS MACHINERY AND EQUIPMENT. Defines "Internet," "Internet service provider," and "telecommunications provider." Provides that machinery, equipment, operating software, and replacement parts and accessories used to provide telecommunications service or Internet service are exempt from the taxes imposed by this chapter if the machinery, equipment, operating software, replacement parts, or accessories are sold, leased, or rented to, or stored, used, or consumed by a telecommunications provider in the conduct of a telecommunications service or Internet service business, or a subsidiary, affiliate, partner, or co-venturer of the telecommunications provider who uses the equipment to upgrade systems to allow for the provision of the telecommunications service or Internet service. Provides that the exemption provided by this section does not include office furniture and related office equipment. SECTION 2. Effective date: The first day of the first calendar quarter beginning on or after the earliest date that it may take effect under Section 39, Article III, Texas Constitution. Makes application of this Act prospective. SECTION 3. Emergency clause.