Bill > HB77

This bill proposes a comprehensive tax reform for Texas that would replace current tax structures with a value-added tax (VAT) system, focusing particularly on school district financing. Specifically, the bill would implement a 6.72% value-added tax at both state and local levels, which would be imposed on businesses supplying services or property, while providing exemptions for small businesses, governmental entities, and nonprofit organizations. The bill would prohibit local sales and use taxes and eliminate school district maintenance and operations ad valorem taxes, contingent upon voter approval of a constitutional amendment. School districts would be allowed to impose a separate enrichment value added tax up to 0.5% through voter approval, with revenues restricted to enrichment facilities and activities. The state would be required to appropriate funding for the Foundation School Program to ensure a basic allotment of at least $6,160 per student in average daily attendance, and the bill includes provisions for helping school districts transition to this new financial model. The proposed changes would take effect on January 1, 2030, and would involve repealing several existing provisions in the Tax Code and Education Code. The bill aims to create a more streamlined, predictable tax system while maintaining educational funding and providing flexibility for local school districts.

Budget and Finance

https://capitol.texas.gov/BillLookup/History.aspx?LegSess=892&Bill=HB77