Although the Texas Legislature only meets in odd-numbered years, state representatives have plenty to keep them busy in the interim. Not only are they running for re-election in the even-numbered years, but the committees on which they serve continue to work throughout the interim. Speaker Joe Straus (R-San Antonio) issued the interim committee charges (PDF) for House committees this week.
When CPAs were trying to get improvements made to the franchise tax on margin during the recent legislative session, House Ways and Means chair Rene Oliveira said he believed the tax should be studied further during the interim. There was even some question about a possible select committee or joint House and Senate select committee to thoroughly vet the tax and propose major revisions. Strauss did not appoint a select committee and one must presume there will be no joint committee. But Strauss did include the following charge to the Ways and Means committee:
“Monitor the revised franchise tax and identify changes to simplify the tax and improve compliance and fairness.”
Most of TSCPA’s recommendations to make changes in the tax last session were to “simplify the tax and improve compliance and fairness.” Maybe there’s hope after all. Oliveira was quoted by the press during the session as stating we needed to study to margin tax to determine why it wasn’t raising more money. When we tried to get changes to simplify and improve fairness to the tax in the last session, we were told no changes could be made that cost the state money. Stay tuned.
Ways and Means charges also include examination of the state’s major tax exemptions (as in sales taxes). Since the 2011 session is expected to contend with a major budget deficit, the focus of this study might be to see how many such exemptions could be eliminated. CPAs will have to stay alert on this issue.
Professional services are not now subject to sales taxes. While there is no explicit exemption for professional services – it’s just not one of the taxable items - once legislators start dealing with deficits, it woudn’t take much of a stretch for someone to suggest broadening the sales tax base to include professional services.
There are several other pertinent Ways and Means committee charges. They are on page 32 of the interim charges (PDF).