Legislators have filed bills seeking to repeal a slurry of petty and outdated taxes. For many of these taxes, administrative costs currently exceed revenue collections gained, making them highly inefficient. Others exist merely as burdensome relics of failed governmental solutions.
Texas Comptroller Glenn Hegar has expressed his support for repeal efforts.
“By repealing these outdated taxes, we are creating a more efficient agency that can better serve the taxpayers,” said Hegar. “The resources needed to administer these tax laws should be redeployed to ensure Texans are getting the best possible government at the lowest possible cost, rather than maintaining red tape and regulation unnecessarily burdening business owners.”
Here is a list of taxes legislators desire to repeal or amend during the remainder of the 84th Legislative Session.
- The Inheritance Tax refers to state taxes that are levied on the property of a decedent’s estate. Until 2005 when the liability was repealed, Texas picked up part of the federal credit for state death taxes paid. Although the state’s tax liability was reinstated in 2011, the federal credit was not. Thus, state inheritance tax collections have been dormant for the past ten years. Evidently, it’s time for this “death tax” to be repealed, and SB752 by Sen. Paul Bettencourt seeks to do just that.
- The Controlled Substance Tax (CST) was created in 1989 to allow drug offenders to avoid criminal prosecution by paying a hefty tax on their illegal substances. This tax requires $3.50 per gram of marijuana (almost $1600 per pound) and as much as $200 per gram for controlled substances. Collections from the CST are deposited into the General Revenue Fund. But CST revenues have historically been meager, and the Texas Court of Criminal Appeals ruled in 1996 that the CST constitutes double jeopardy. Thus, Rep. Drew Springer has filed HB 1905 in an effort to remove this unnecessary tax.
- The Airline/Passenger Train Beverage Tax, enacted for airlines in 1969 and extended to passenger trains in 1985, imposes a fee of five cents on every alcoholic beverage served to a passenger. Annual collections from this tax, which are deposited to the General Revenue Fund, totaled only $319,000 in 2013 and are likely to remain constant if the tax remains in effect. Rep. Springer’s HB 1905 seeks to eliminate this tax in addition to the CST.
- The Liquefied Gas Tax imposes a tax of $0.15 per gallon on liquefied gas (this does not include liquefied or compressed natural gas). Vehicles that run on propane gas must display decals that verify payment of the motor fuels tax. However, propane gas is no longer taxed as a motor fuel, and the cost of collecting this tax currently exceeds the revenues that it generates. SB 759 by Sen. Lois Kolkhorst would eliminate the decal system and enable operators of propane-fueled vehicles to pay their gas tax in the same way as operators that use gasoline.
- The Combative Sports Admissions Tax collects 3% of the gross receipts from admission to sporting events featuring boxing and martial arts. It also collects 3% of the gross receipts from the sale of broadcast rights, the permits for which are required for sporting events where admission is charged. SB 752 by Sen. Bettencourt would repeal the admission tax, and it would also require the surety bond that accompanies a broadcast license dependent upon approval from the Texas Commission on Licensing and Regulation rather than on payment of the admission tax.
- The Bingo Rental Tax, enacted in 1991, collects 3% of gross rentals received by a commercial lessor and deposits the money into the General Revenue Fund. Collections have hovered around $1.2 million per year since 1996. Kolkhorst’s SB 759, in addition to modifying the Liquefied Gas Tax described above, would also eliminate the Bingo Rental Tax.
- The Fireworks Tax rate currently is 2% of the sale price of fireworks, in addition to state and local sales taxes. The Fireworks Tax collections are deposited into the rural volunteer fire department insurance fund. Because the collections are not worth the tax’s administrative cost, SB 761 by Sen. Brandon Creighton would repeal the Fireworks Tax. The insurance fund would not be eliminated, however – two percent of the sales tax on fireworks purchases would be dedicated to supply its coffers. That two percent transfer would be cheaper than collection costs for a separate tax.
- The Oil Regulation Tax requires $0.008125 per barrel, a combination of the Regulatory Fee ($0.001875/bbl) and the Oil Production Fee ($0.00625/bbl). All collections flow into the General Revenue Fund. Annual collections were moderate throughout the 2000s but have risen sharply since 2010, hauling in over $1.3 million in 2013. On the grounds that the tax revenues are outweighed by administration costs, HB 1906 by Rep. Drew Springer would repeal the tax, using general revenue to pay for the enforcement of oil and gas laws instead.
- The Sulphur Tax, enacted in 1930, imposes a tax of $1.03 per long ton of sulphur. One-fourth of the sulphur tax revenue flows to the foundation school fund, and three-fourths flow to the general revenue fund. Collections have risen sluggishly since 2007, with 2013 revenues totaling $3.3 million. SB 757 by Sen. Charles Perry would repeal the Sulphur Tax on the grounds that administrative costs currently outweigh tax collections.
The repeal efforts garnered praise from Lt. Gov. Dan Patrick, who is the presiding officer of the Senate, and House Speaker Joe Straus.