State's new tax on firms 'a miss'
June 26, 2008
Texas' new business tax has brought in $4.2 billion in revenue so far, the state comptroller's office announced today. That's short of the $5.9 billion that the tax is projected to bring in this fiscal year, which ends Aug. 31.
Written by Peggy Fikac, Houston Chronicle
AUSTIN — Texas' new business tax has brought in $4.2 billion in revenue so far, the state comptroller's office announced today.
That's short of the $5.9 billion that the tax is projected to bring in this fiscal year, which ends Aug. 31, but the comptroller's office cautioned that final figures won't be available until November because businesses were allowed to file for an extension.
The expanded business tax was approved in 2006 as part of a package that also lowered local school property tax rates. It came due this year.
The new tax closed provisions in the former franchise tax that allowed many businesses to avoid paying, increasing the number of those that must file from about 700,000 to 900,000.
Some that file, however, still will have no taxes due if they meet certain criteria.
The filing deadline was moved from May 15 to June 16 by Comptroller Susan Combs to allow businesses more time.
An estimated 500,000 returns have been filed so far, Combs spokesman R.J. DeSilva said today. Some returns cover groups of businesses, so it's unclear how many entities are represented by the returns, he said.
Of those that filed, 133,000 made payments, including 46,000 that made a required payment in asking for an extension to pay whatever else they may owe.
Small businesses, in particular, have said changes in the tax mean skyrocketing bills for many who were paying the former franchise tax all along.
Under the previous franchise tax, businesses that didn't organize in a way to avoid the levy paid the greater of 0.25 percent tax on taxable capital or a 4.5 percent tax on earned surplus net income, plus compensation of officers and directors.
The expanded business tax is based on gross receipts — either 1 percent or half a percent, depending on the type of business — with deductions for cost of goods or employee benefits.
Some businesses have noted with concern that they owe the tax, regardless of whether they made a profit.
Of proceeds from the business tax, $2.8 billion is projected to go this year for general revenue and $3.1 billion to offset local school property tax relief.
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