HBA-JLV H.B. 2815 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 2815 By: Hartnett Ways & Means 3/30/2001 Introduced BACKGROUND AND PURPOSE Currently, the Texas sales tax exemption for manufacturing equipment specifically excludes research and development (R&D) machinery and equipment. Increasingly, other states are enacting provisions exempting R&D equipment from sales taxation in order to encourage the development of the technology industry. Many believe that R&D sales tax exemptions could promote growth and expansion of companies, enhance development of new technology and new products, and create new jobs. House Bill 2815 creates a sales tax exemption on qualified purchases of research and development machinery and equipment. 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. ANALYSIS House Bill 2815 amends the Tax Code to exempt from the limited sales, excise, and use tax machinery, equipment, or replacement parts that are used directly in the research or development of inventions, products, processes, or technology by a person that is primarily engaged in the manufacturing, processing, or fabrication of tangible personal property for ultimate sale, or the performance of scientific or technical services for such a person. The bill sets forth incremental increases in sales tax exemptions on qualifying purchases for each taxpayer from 2002 until 2006. The bill provides that the sales tax exemption does not include office equipment or supplies, or equipment or supplies used in sales or distribution activities or in transportation activities. EFFECTIVE DATE January 1, 2002.