This Year’s Remodel

After watching their business districts wither away as companies set up shop in the suburbs, Texas cities and towns are banding together to fight back. At the behest of the more than 220 members of the Texas Downtown Association (TDA), state representative Elliott Naishtat of Austin has drafted a bill that would exempt labor on renovations from the state sales tax, making it as affordable to fix up an old building as it is to build a new one. According to current law, you don’t pay tax on labor that’s part of a new construction project, but you do when you renovate—and since labor represents, typically, more than half of your total bill, that can add up quickly. Exactly how much it adds up to won’t be calculated by the state comptroller’s office for several weeks, “but we suspect it’s significant,” says TDA board member Lucy Buck. The problem, of course, is that a sales-tax exemption means less revenue. “We wouldn’t have dreamed of trying to get this done when there wasn’t a surplus,” Buck acknowledges. As a hedge against complaints of budget busting, Naishtat’s bill limits the exemption only to renovations of buildings that are at least thirty years old. “We’re not asking for an incentive to get people to relocate downtown,” Buck says. “We simply want to eliminate the disincentive.”

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