Bill > HB960

This bill proposes a comprehensive tax reform in Texas, primarily focusing on replacing school district maintenance and operations ad valorem taxes with a new value added tax (VAT) system effective January 1, 2030. The bill establishes a state-level VAT at 6.72 percent on services and property supplied by businesses, with provisions for input and output tax calculations, where businesses can offset taxes paid on inputs against taxes collected on outputs. The legislation prohibits local sales and use taxes but allows political subdivisions to impose local value added taxes up to 2 percent, and enables school districts to implement a separate enrichment value added tax of up to 0.5 percent, subject to voter approval. The bill also requires the state to fully fund the Foundation School Program, guaranteeing a basic allotment of at least $6,160 per student in average daily attendance, and mandates that school districts prepare transition reports detailing how they will shift from property tax-based funding to the new VAT system. Critically, the bill's implementation is contingent on a constitutional amendment prohibiting school districts from imposing maintenance and operations ad valorem taxes, and it repeals several existing tax code and education code provisions to facilitate this fundamental restructuring of Texas's tax and school finance systems.

Budget and Finance

https://capitol.texas.gov/BillLookup/History.aspx?LegSess=89R&Bill=HB960