Higher Taxes in School Finance Plan

Proposal would increase sales, cigarette and alcohol taxes; businesses could see state tax
Monday, May 2, 2005

Associated Press

AUSTIN — Texans would pay higher sales, cigarette and alcohol taxes and more businesses would be forced to pay a state tax under a school finance proposal put forth Monday by a Senate committee.

The plan is designed to offset school property tax cuts and generate more money for public education. It attempts to reduce property taxes by $6 billion over the next two years, if a proposed constitutional amendment is passed allowing a statewide property tax.

The Senate Finance Committee plan differs in key areas from a House school finance tax plan approved last month.

Alcohol excise taxes would go up by 25 percent from existing rates under the Senate proposal. The House plan did not include an alcohol tax increase.

Businesses under the Senate proposal would pay a 2.5 percent tax on earned surplus, which is lower than the existing franchise tax. But more businesses would have to pay. The Senate proposal would cover all businesses except sole proprietorships.

The state sales tax would go up from the current 6.25 percent to 6.75 percent. That would include taxes paid on motor vehicles and boats.

Under the Senate plan, the cigarette tax would be increased by 60 cents per pack, up to $1.01 per pack. The current rate is 41 cents a pack.
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