After Governor Price Daniel allowed the state sales tax to become law without his signature in 1961, cash register clerks across Texas started ringing up purchases by entering the price and then adding the phrase, “Now, let’s have a penny for Price.”
Perhaps, if the the sales tax cut package unveiled by House Ways and Means Chairman Dennis Bonnen passes, the clerks will finish purchases by saying, “Now for some bucks from Bonnen.”
Ha! Unlikely. For one, the House tax cut package is far from resembling the one being pushed by the Senate.
The Senate’s homeowners property tax plan goes to the heart of campaign promises and fits with Governor Greg Abbott’s call for tax cuts. But the reality is very few Texans would see that tax cut, even among the homeowners. Everyone would get a tax cut under the House plan, but it is spread so thin that only some big steel businesses that make a lot of taxable purchases would see a significant savings.
And perhaps that’s the real play here. Big industry is completely left out of the Senate tax cuts to property taxes and franchise taxes. The House gives something to everyone, but the real winner is big industry. So the two sides go to conference committee with a means of negotiating. If the Senate wants its property tax cut, big petrochemical will have to get a share as well.
The total House tax cut plan would cost $4.87 billion, with a key element being the reduction of the state sales tax rate from 6.25 percent to 5.95 percent. According to Bonnen, the cut would result in a savings of $172 a year for the average family of four and “substantial savings” for business. (Sale taxes may be higher in some areas because of local sales taxes.) The Bonnen bill will save about 35 cents on each $100 of taxable purchases.
“This is tangible tax relief that will benefit families and businesses of all sizes every time they buy something,” said Bonnen. “Texans won’t have to take our word for it that we cut their taxes. They will see it on every receipt.”
In the meantime and in reality, the House and Senate tax cut bills are looking like relief that only the politicians will feel when they tell voters they cut taxes. The Texas Tribune’s Ross Ramsey took out his calculator to discover neither the House sales tax cut nor the Senate property tax cut will mean much for the average family.
Neither set of tax cutters is exactly remaking the average family budget here. Many of the lawmakers who will vote on this will probably hit lobbyists up during the legislative session for at least one meal costing more than the tax cuts that have been proposed.
Hearst Bureau’s Peggy Fikac found similar problems with the House sales tax package.
“It’s going to be meaningful when you are talking about a multibillion-dollar tax cut,” said budget expert Dale Craymer of the business-based Texas Taxpayers and Research Association. “The challenge is, is it going to be visible? And that’s a tougher nut to crack.”
If there’s an issue that is most likely to create a special session, at the moment, I’d say tax cuts.