The Texas House of Representatives recently passed several measures aimed at providing long-term property tax relief to Texas taxpayers.
The House passed four bills, each part of the Texas Tax Reform Commission’s plan, designed to lower property taxes while providing a stable, alternative source of revenue to compensate for the property tax cuts.
“I believe that the measures that we passed take the necessary first step towards providing long-term, meaningful property tax relief for Texas residents,” said Representative Callegari, of Katy.
“For years property tax levels in this state have increased to a point where they actually hurt Texas families. The bills that we passed yesterday provide immediate property tax relief with the aim of further reducing Texas families’ tax burdens in the future.”
The four measures approved by the Texas House of Representatives included House Bills 1, 2, 3, and 4. House Bill 1 would use $2.7 billion of the state’s projected surplus to buy down statewide property taxes by $0.17 in 2006.
The cuts in property taxes made by H.B. 1 would be made permanent by the reforms to the state’s franchise tax system in House Bill 3.
As approved by the House of Representatives, H.B. 3 lowers the business tax from 4.5 percent to 1 percent or less and expands the number of businesses eligible to pay the business tax while closing several corporate loopholes.
“The plan passed on Monday represents a tax shift from an over-reliance on property taxes to the use of a broader, balanced business tax,” said Representative Callegari. “In order to compensate for the long term property tax cuts, which will benefit both homeowners and businesses, we had to look for an alternative source of revenue. The result was a reformed franchise tax plan that protects our property tax cuts, provides a reliable source of funding for our schools, and does not increase our taxes overall.”
House Bill 2 plays a key role towards keeping property taxes low. The bill requires that all surplus revenues from the reformed tax structure be used for property tax relief. The bill establishes a property tax relief fund into which all surplus revenue from the reformed business tax must be deposited. Those funds would then be earmarked exclusively for future property tax reductions; future legislatures would be prohibited from using funds from the property tax relief fund for any other purpose. H.B. 4 reforms used motor vehicle sales taxes.
“The bills that we passed on Monday provide for the largest property tax cut in Texas history,” said Representative Callegari. “More importantly, they will create a new tax system where any surplus revenues that are generated through the reformed business tax are dedicated to property tax reduction. In the long run this will help the Texas economy while easing the tax burdens endured by Texas homeowners.”
“Despite the good policy measures that we passed earlier this week, there remains work to be done. In particular, I strongly believe that we need to cap property tax appraisal rates and establish a firm limitation on future government growth,” Callegari said. I have already filed two measures lowering the cap on property appraisals to five percent and am in the process of drafting a measure limiting future government expenditures. I respectfully ask Governor Perry to expand the call for this special session so that these important pieces of legislation may be considered.”
