Reduction of State’s Sales Tax
Two North Texas Senators have proposed a plan to cut Texas sales tax by 8%, a move that could potentially put more money in the pockets of Texans. The bipartisan proposal by Democrat Royce West and Republican Bob Hall calls for reducing the state’s sales tax by half a cent, from 6¼ cents to 5¾ cents per dollar spent, starting from October 1.
Reduction of State’s Sales Tax in Texas. (Photo: TripAdvisor)
The proposal has gained traction as a result of a nearly $33 billion revenue surplus in Texas, which Comptroller Glenn Hegar attributed to the high sales tax rate. The reduction is expected to cost the state treasury $7 billion for the next two years, representing 8% of the $87.9 billion of discretionary revenue that Hegar anticipates will come from sales tax in the next cycle.
The proposal aims to make tax-cut discussions more inclusive, particularly for renters who do not benefit from previous tax relief discussions, which mainly focused on homeowners’ school property taxes and the property tax on businesses’ “personal property.” This proposal seeks to broaden the scope of the tax cut to benefit more Texans.
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According to a published article in The Dallas Morning News, Senator West pointed out that business, which pays an estimated 60% of all property taxes in Texas, prefers a rate reduction to an enlargement of homestead exemptions. He also noted that sales tax is incredibly efficient to deliver tax relief because more people pay sales tax than pay property tax.
The bill has been filed, and Senator West is working hard to secure co-sponsors from both sides of the aisle to get leadership on board with the proposed plan of tax relief. If the proposal is successful, it could potentially bring significant relief to Texans struggling with high taxes and could stimulate economic growth by putting more money in consumers’ pockets.
Overall, the bipartisan proposal by Senators West and Hall to cut Texas’ sales tax by 8% can potentially provide significant relief to Texans. The reduction in sales tax rate from 6¼ cents to 5¾ cents per dollar spent starting from October 1 is expected to cost the state treasury $7 billion for the next two years. The proposal seeks to make tax-cut discussions more inclusive and benefit more Texans, particularly renters who do not benefit from previous tax relief discussions. With the backing of co-sponsors from both sides of the aisle, this proposal could bring relief to Texans struggling with high taxes while also boosting economic growth.
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