Texas Governor Signs all Significant Texas Franchise Tax and Texas Sales Tax Bills

Yesterday, the Texas franchise tax and the Texas sales and use tax became a bit more complicated. Governor Rick Perry just signed into law all significant Texas franchise tax and Texas sales tax bills the Legislature passed in 2013. Each bill adds a few more twists to an already-tangled Texas tax code.

Amanda summarized the 2013 changes to the Texas sales tax here. I posted an overview of the 2013 changes to the Texas franchise tax here. Most of the changes go into effect on January 1, 2014, but some  provisions are effective before then (usually September 1, 2013).

I’m not surprised that the Governor signed these bills. Most were tax cuts, and Governor Perry asked the Legislature for tax cuts at the beginning of the session. The only (slight) surprise was his signing of HB 3572, a bill that we haven’t covered yet on this website. This bill is, overall, a tax increase on liquor, mixed drinks, and other alcoholic beverages  served by bars and restaurants with a liquor license. It cuts the mixed beverage gross receipts tax (a tax on the bar or restaurant) from 14 percent to 6.7 percent. But it replaces the cut taxes with a new sales tax on mixed beverages (a tax on the drinker, collected and remitted to the state by the bar or restaurant) of 8.25 percent. Eight and a quarter plus 6.7 equals 14.95 percent–almost a percentage point higher than the current tax on mixed drinks. Clearly a tax increase, at least on the consumer.

We’ll have more to say about the new mixed beverage tax late this week. If you have any questions about the other bills that passed, please let us know.

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