We might have to change our government notes again.
Key Terms: regressive taxes, unitary government, fiscal policy, local government, Texas constitution
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Texas' top three political leaders — Gov. Greg Abbott, Lt. Gov. Dan Patrick and House Speaker Dennis Bonnen — threw their support Wednesday behind a proposal to increase the sales tax by 1 percentage point in order to lower property taxes across the state.
But that's only if lawmakers agree to limit future local property tax increases.
The proposal would raise the state's sales tax from 6.25% to 7.25%, generating billions of additional dollars annually for property tax relief, if voters approve a constitutional amendment. But the idea will be a hard sell to Democrats, since the sales tax is considered regressive, meaning lower-income Texans end up paying a larger percentage of their paychecks than higher-income Texans.
"Today we are introducing a sales tax proposal to buy down property tax rates for all Texas homeowners and businesses, once Senate Bill 2 or House Bill 2 is agreed to and passed by both Chambers. If the one-cent increase in the sales tax passes, it will result in billions of dollars in revenue to help drive down property taxes in the short and long term," said a joint statement from the three Republicans.
Neither chamber has passed HB 2 or SB 2, which would require voter approval of property tax increases over 2.5%.
The House Ways and Means Committee was scheduled to take public testimony on the House's sales tax swap proposal this week but delayed hearing the bills. Rep. Dan Huberty, R-Houston, who authored House Joint Resolution 3 and House Bill 4621, is considering changing the legislation to use a fraction of the additional money generated by the sales tax for public schools — in order to get more Democrats on board.
The bills are intended to provide another revenue source to help significantly cut down local school property taxes, which make up more than half of the local property taxes levied in Texas.
If the Legislature approves the resolution, the constitutional amendment would go to voters to approve in November, and if voters sign on, the tax rate change would apply in January 2020.
