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F I S C A L I M P A C T R E P O R T
SPONSOR Sanchez, M
DATE TYPED 2-28-2005 HB
SHORT TITLE Personal Property Sale Gross Receipts
SB 766
ANALYST Taylor
REVENUE
Estimated Revenue
Subsequent
Years Impact
Recurring
or Non-Rec
Fund
Affected
FY05
FY06
($1,440.0)
Similar
Recurring
General Fund
($910.0)
Similar
Recurring Local Governments
(Parenthesis ( ) Indicate Revenue Decreases)
SOURCES OF INFORMATION
LFC Files
Taxation and Revenue Department
SUMMARY
Senate Bill 766 expands the gross receipts tax deduction for commissions on sales of tangible
personal property. The deduction would apply to all receipts from these sales, while currently
the deduction is provided only for those which are not subject to the gross receipts tax.
The bill has a July 1, 2005 effective date.
FISCAL IMPLICATIONS
In a preliminary analysis TRD estimated that the tax base—commissions on sales of tangible
personal property—is approximately $35 million. Applying an average statewide gross receipts
rate of 6.6 percent implies a revenue loss of $2.3 million in total. Sixty percent of the revenue
loss is attributed to the state general fund, with the remainder affecting local government reve-
nues.
TRD estimates the tax base from figures in the 1997 Census of Retail Trade and then grows
these to provide a 2006 approximation. The 1997 census reported 208 “direct selling establish-
ments with total revenues of $202 million and payroll of $25 million. TRD uses the payroll fig-
ure to approximate commissions, and then increases the figure by 4 percent per year to estimate
pg_0002
Senate Bill 766 -- Page 2
2006 commissions.
ADMINISTRATIVE IMPLICATIONS
The Taxation and Revenue Department reports that the administrative implications of this bill
would be minor.
BT/rs