America's Property Tax Advisor

Texas Legislature Considers Tax Swap


Texas lawmakers are looking at different proposals that would swap higher sales taxes for lower property taxes. Several bills have been filed but none have passed. The Regular Session of the 86th Legislature ends May 27, 2019.


HB 705


House Bill 705, filed by Rep. Charlie Geren, R-Fort Worth provides that cities and counties may eliminate their local property taxes for the maintenance and operations portion of their school tax levy by adopting a general sales tax of 2% for each entity.


HB 2915


House Bill 2915 lowers the public school maintenance and operations property tax by increasing sales taxes on gasoline and closing sales tax exemptions on items like ice cream, baked goods, e-cigarette vapor fluid and over-the-counter medicine. The bill by Rep. Drew Springer, R-Muenster would also increase the homestead exemption to 50% of a home’s value, which would amount to an estimated $6.2 billion less in property tax collections statewide.


HB 3968


Rep. Chris Turner, D-Grand Prairie is proposing that the state systematically examine each sales tax exemption every six years to decide whether it is still needed. He believes House Bill 3968 is a good alternative to raising sales taxes and would bring in new revenue by doing away with out-of-date loopholes. There are no specifics on how property taxes would be lowered if this bill becomes law.




House Joint Resolution 3, sponsored by Rep. Dane Huberty, R-Houston proposes a constitutional amendment that would allow the statewide sales tax to increase, with the added revenue targeted exclusively for public schools. Huberty emphasized that raising the sales tax is just one measure under consideration, and that it’s still too early to determine how much property tax relief would be created.


Opponents Speak Out


Increasing sales taxes to lower property taxes troubles many analysts, including Eva DeLuna Castro, a budget and policy expert with the Center for Public Policy Priorities. Not only is a sales tax considered regressive for taking more money from low-income people than rich, but its collections are more susceptible to ups and downs of the economy, Castro told the Houston Chronicle.


Vince Ginn, a senior economist with the Texas Public Policy Foundation, believes it will be difficult to aggressively fund school finance while simultaneously reducing property taxes. Ginn said to keep schools funded at the level the Legislature has proposed will be tricky. “It’s kind of like the weather forecast, you never know what it’s going to be in a couple of days, much less for a $1.7 trillion economy. Things can change pretty quickly.”