Tuesday, March 08, 2005

New House Bill Calls for Extra Levy on Snack Foods


Measure seeks hike in general sales tax plus extra charge on baked goods, sodas, chips.

By Jason Embry
Tuesday, March 08, 2005

Texans would pay more than 10 percent sales tax each time they buy cookies, popcorn, soda or other snack foods if the Legislature approves a revised tax bill passed by a House committee late Monday.

The bill is a new version of the tax-shift legislation that the House Ways and Means Committee passed last week. The committee reworked the bill after Comptroller Carole Keeton Strayhorn's office said it would not raise as much money as House leaders projected.

Rep. Jim Keffer: Legislator says revised plan answers comptroller's concerns.

* Complete Legislature coverage

Under the new version, a 3 percent snack tax — which lawmakers included specifically to target obesity — would be added to the general sales tax charged for those items.

The House bill also raises the general state sales tax from 6.25 percent to 7.25 percent, which would be the highest state rate in the country, and slightly more than what was approved last week.

In addition, the bill calls for businesses to pay a payroll tax of 1.15 percent on each employee's salary, up to $90,000 per worker, which is also a slight increase from last week's proposal.

Ways and Means Committee Chairman Jim Keffer, R-Eastland, said the tax would apply to any worker for whom an employer pays into the unemployment insurance system.

The House is considering the new and increased taxes to pay for a proposed one-third reduction in school property taxes as part of an overhaul of the way Texas pays for public schools.

Strayhorn had said the tax plan approved last week would take in about $1 billion less than what would be needed to pay for that property tax relief.

Keffer said he's confident the new version of the bill addresses Strayhorn's concern, as well as questions her office raised about how the bill should be interpreted.

"We've been working with the comptroller all day long," he said. "We are in agreement."

While some foods are exempt from sales taxes, the ones addressed in the snack tax have not been, he said. The new tax would apply to sales in stores but not restaurants.

Keffer said he expects the bill to come before the full House on Thursday. It will follow a major school reform bill that is up for debate today. The tax bill also calls for increases in the cigarette tax and the sales tax for autos and boats. It would expand the sales tax to cover bottled water, newspapers, billboard advertising and car washes and repairs.

All five Republicans on the committee and one Democrat voted for the revised bill.

Monday's events marked the second time in the last two regular legislative sessions that House Republicans had to tweak a major piece of legislation in a committee after the committee had voted on it.

In 2003, the House Civil Practices Committee had to reconsider a tort reform bill after Democrats complained the bill had been discussed at a meeting that wasn't properly announced in advance.

Also Monday, the head of the Senate Education Committee criticized the House school finance legislation because it does not specify where the state would find more than $3 billion in additional funding over the next two years.

"I think it's very difficult to just say we'll pass all this education reform, but we don't know where the money's coming from," said Sen. Florence Shapiro, R-Plano.

"What if they only find $2 billion in scrubbing the budget instead of $3 billion?"

House Speaker Tom Craddick has said the new money for schools will come from savings in other parts of the state budget.

Some members of the House Appropriations Committee are reviewing the budget to look for ways to save that money.

Through a spokeswoman, House Public Education Committee Chairman Kent Grusendorf said, "I have been assured that when House Bill 2 passes, the money to fund House Bill 2 will be made available."

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