HBA-JLV H.B. 2815 77(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 2815
By: Hartnett
Ways & Means
3/30/2001
Introduced



BACKGROUND AND PURPOSE 

Currently, the Texas sales tax exemption for manufacturing equipment
specifically excludes research and development (R&D) machinery and
equipment.  Increasingly, other states are enacting provisions exempting
R&D equipment from sales taxation in order to encourage the development of
the technology industry.  Many believe that R&D sales tax exemptions could
promote growth and expansion of companies, enhance development of new
technology and new products, and create new jobs.  House Bill 2815 creates
a sales tax exemption on qualified purchases of research and development
machinery and equipment. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

ANALYSIS

House Bill 2815 amends the Tax Code to exempt from the limited sales,
excise, and use tax  machinery, equipment, or replacement parts that are
used directly in the research or development of inventions, products,
processes, or technology by a person that is primarily engaged in the
manufacturing, processing, or fabrication of tangible personal property for
ultimate sale, or the performance of scientific or technical services for
such a person.  The bill sets forth incremental increases in sales tax
exemptions on qualifying purchases for each taxpayer from 2002 until 2006.
The bill provides that the sales tax exemption does not include office
equipment or supplies, or equipment or supplies used in sales or
distribution activities or in transportation activities. 

EFFECTIVE DATE

January 1, 2002.