Texas’ Republican leaders have called for multibillion dollar cuts to business and property taxes but so far have remained mum on what mechanisms they’d prefer lawmakers use to get there.
On Wednesday, though, Lt. Gov. Dan Patrick indicated he’d like to pay for the tax cuts by boosting sale tax collections while slowly weaning the state off its reliance on property tax revenue.
“The revenues we get at the state level are primarily sales tax,” the Houston Republican said Wednesday in a speech at the Texas Association of Business’ annual conference. “What we’ve done is a gradual transition from bringing more people in to help pay for what a handful of people – businesses and property owners – have been paying.”
Asked what, if any, legislation has been filed on that front that Patrick might get behind, his spokesman mentioned two “loosely related” bills filed by state Sen. Brandon Creighton.
The Conroe Republican’s SB 186 would require the state comptroller to “conduct a comprehensive study” analyzing “the feasibility of implementing alternative methods” to the state’s business franchise tax and what alternative ways the state could raise sufficient funds to “address the needs of this state.”
Among those, the study would have to look at: imposing a value-added tax, eliminating exemptions from the sales and use tax and increasing the rate of the sales and use tax.
SB 331 would require the comptroller to issue rebates to businesses that pay the franchise tax if there is unspent general revenue leftover from the previous two-year budget cycle.
The first-draft Senate budget Patrick unveiled last month calls for $3 billion in property tax cuts and $1 billion in business franchise tax cuts. The House’s budget plan, released before the Senate’s, did not account for tax cuts although officials have said they will be added later.
Asked Wednesday what the House has in mind for tax cuts, House Speaker Joe Straus said the lower chamber hasn’t “come to a conclusion yet.”
“We left room in our base budget for tax cuts but didn’t specify what they would be,” he told reporters after his own speech to the business association. “Again, that’s what the session’s for. In the House, we don’t just say: Here it is. Vote on it. This is what the speaker wants. We have ideas. We have a lot of leaders and a thorough discussion.”