NEWS RELEASE
From the Office of State Senator Rodney Ellis

For Immediate Release
March 4, 1999
Contact: Jeremy Warren, (512) 463-0113

Senator Ellis Offers Plan to Provide $400 Million in Sales Tax Relief to Texas Working Families

Austin -- Senator Rodney Ellis (D-Houston) today outlined to the Senate Finance Committee his plan to provide $400 million in sales tax relief to Texas working families.

Senator Ellis' legislation, SB 441, will expand the current tax exemption on prescription drugs to over the-counter medicines, exempt diapers from sales taxes, and create a nine-day sales tax holiday in August on shoes and clothing to help families prepare their children for school.

"Sales tax relief will help all Texans, but particularly those most in need," said Ellis. "Today, our sales tax rate takes the most from those Texans who can least afford it. Eliminating taxes on essential daily items like over-the-counter medicines and diapers, and creating a sales tax holiday for parents to help pay for back-to-school clothes, will mean a real tax cut for millions of hard-working Texans."

SB 441 is similar to proposals made by Governor Bush during the 1998 Gubernatorial campaign. During the campaign, Governor Bush called sales tax relief "a direct way to return money to Texas families." Albert Hawkins, Governor Bush's Budget Director, gave testimony to the committee on the bill. Senator Ellis has asked Governor Bush to give SB 441 the same emergency consideration given to SB 290, the oil and gas tax cut for small producers.

Texas' sales tax, when combined with local sales taxes, is among the highest, most regressive in the nation. Only Nevada and Washington state have a higher combined sales tax rate. High sales taxes hit low income and elderly Texans hardest, forcing the poorest Texans to pay up to six times more of their income in sales taxes than more affluent Texans.

Currently, Texas has the largest number and 5th highest percentage, of people living in poverty in the nation. In Harris County, 600,000 Texans, approximately 1-in-5, live below the poverty line. By eliminating the sales tax on daily staples, Texas can reduce the bite the sales tax takes out of working families' pocketbook. Currently, four states -- Minnesota, New Jersey, Pennsylvania and Rhode Island -- exempt sales taxes on shoes and clothing. New York and Florida have tax holidays on purchases between $50 and $500. Kentucky has begun phasing out its tax on prescription drugs.

"Despite our growing economy, too many hard-working Texas families are struggling to make ends meet. Our sales tax plan will put more money back in the pockets of all Texans."

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