HBA-LJP H.B. 3594 77(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 3594
By: Oliveira
Ways & Means
4/12/2001
Introduced



BACKGROUND AND PURPOSE 

If Texas is to develop the communications infrastructure necessary for
Texas businesses to compete in the Internet age, over hundreds of millions
of dollars may be needed to invest in broadband equipment and services.  A
tax exemption may help make money available to invest in this equipment and
in services to help Texas build a competitive communications
infrastructure.  House Bill 3594 provides a sales and use tax exemption for
machinery and equipment used in providing broadband 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. 

ANALYSIS

House Bill 3594 amends the Tax Code to provide for an exemption from
limited sales, excise, and  use tax for qualifying equipment that is placed
in service in a strategic investment area and  is used to provide broadband
service if the equipment is sold, leased, or rented to, or stored, used, or
consumed by a broadband service provider or a subsidiary, affiliate or
partner of such provider in the conduct of providing broadband service. 

The bill also provides for an exemption from limited sales, excise, and use
tax for equipment that is not placed in service in a strategic investment
area and  is used to provide broadband service if the equipment is sold,
leased, or rented to, or stored, used, or consumed by a broadband service
provider or a subsidiary, affiliate or partner of such provider in the
conduct of providing broadband service, such equipment is subject to taxes
imposed by city under the Local Sales and Use Tax Act and a county under
the County Sales and Use Tax Act.  This exemption begins for property
purchased in 2003 with a 25 percent refund of the tax paid to this state
for the property and increasing in 25 percent increments every year until
there is a tax exemption for property purchased on or after January 1,
2006. 

To receive a refund, the bill provides that a taxpayer must apply to the
comptroller of public accounts (comptroller) for the refund during the
calendar year immediately following the year in which the taxes were paid
and provide the comptroller with any information the comptroller requires
to determine the validity of the refund claim.  The bill provides that
after the comptroller determines that a person is eligible for a refund,
the refund must be paid to that person. 

EFFECTIVE DATE

On passage, or if the Act does not receive the necessary vote, the Act
takes effect September 1, 2001.