Ellis Files Plan to Scrub, Sunset and Repeal Scores of Tax Breaks
SJR 3 /SB 42 creates a Commission on Periodic Tax Preference Review on tax breaks
(Austin, Texas)—To help eliminate inefficiencies in the Texas tax code and to reduce long-term budget deficits, Senator Rodney Ellis (D-Houston) today filed legislation to scrub, sunset and possibly repeal scores of preferential tax breaks in the Texas budget.
Senate Joint Resolution 3/Senate Bill 42 would:
- Identify tax Preferences in Code -- Require the Texas Comptroller of Public of Accountant to identify all state and local tax preferences in the Code
- Set Schedule for Review -- The Comptroller would set a schedule for all to be reviewed in next six years, based on the most costly to least costly.
- Review and Study -- The Legislative Budget Board would perform periodic reviews of those state and local tax preferences over a six year period. The LBB would then make recommendations to repeal, retain, or amend a tax, as well as provide drafts of any proposed legislation needed to implement the recommendations in a report to the Senate Finance Committee and the House Ways and Means Committee.
- Finance and Ways Means Final Report -- Both the Senate Finance and House Ways & Means Committee would review LBB report and submit Final Report to, must list deviations thy mad e from LBB report, and have a public hearing on final report.
- Automatic Sunset for New Tax Breaks: Under SJR 53, all future tax breaks would expire after 6 years, unless legislature provides for earlier or later expiration date.
"The Texas Tax Code contains several preferential tax breaks that were inserted into the code in the distant past, but live on long past the time the rationale become unjustified spending programs 'hidden' within the tax code," said Ellis. "These breaks cost Texas billions of dollars in revenue and may provide no real economic benefit. It is long past time to scrub the tax code for all such wasteful provisions."
There are potentially billions in tax breaks, loopholes and exemptions in the Texas Tax Code, including:
- Texas gave away over $7.4 Billion in revenue from 2004-09 to Natural gas producers, due to an antiquated definition of "high cost" gas that reduces the tax rate actually paid from the 7.5% in statute to under 2% (1.1 to 1.9).
- Texas gave retailers a tax break of over $200M last year simply to file their sales tax on time.
State agencies are subjected to a "sunset review" every twelve years to determine their effectiveness, and if the agency's functions need to be continued. The tax code would benefit from a similar periodic review of all its exemptions, exclusions, and special treatments to answer one simple question--are they working?
With a record budget deficit, Texas has an obligation to take a serious look at whether or not it responsible fiscal policy to spend billions of dollars in tax giveaways to profitable corporations, before we are cut vital services for Texas Families. Texas is currently contemplating deep cuts to public education, health and human services and other vital services. SJR 53 puts the same level of scrutiny and accountability measures key programs must undergo onto tax subsidies.
"Our current budget crisis demands that we be as prudent as possible with all our tax expenditures and giveaways," said Ellis. "We need to be honest about what these tax breaks really are--they are budget appropriations tucked into the tax code. These folks are getting an appropriation, budget cycle after budget cycle, outside of the budget process, without having to go through the same level of scrutiny as every other group looking for appropriations."