First Call for Sales Taxes on Professional Services

Rep. Ryan Guillen (D-Rio Grande City), writing in the Corpus Christi Caller blatantly calls for tax increases. He gets very specific, including a call for expanding the sales tax base to include business/professional services.  Fortunately, as reported in the Fort Worth Star-Telegram, House Ways and Means committee chairman Rep. Harvey Hilderbran opined “most lawmakers have no interest in broadening the sales tax base.”  All tax bills must first be approved by Ways and Means before they can be considered by the legislature. 

Coinciding with Guillen’s call for more taxes was the issuance of a report by the state Comptroller titled Tax Exemptions and Tax Incidence, which is 68 pages of how to raise taxes by eliminating exemptions, exclusions and credits. The report shows that a sales tax on business and professional services would generate almost $12 billion in new state revenue over the next biennium. Included in that amount is $511 million attributable to accounting and auditing services.

In addition to calling for the expansion of the sales tax base, Guillen also suggests “a half-cent sales tax increase, a one-fourth-percent franchise tax hike, a half-cent gas tax increase, a 59-cent cigarette tax increase, an Internet purchase sales tax, a one-half-percent motor vehicle sales tax increase, a 1-cent beer tax and a 1 percent soda tax to raise a combined $9 billion.”

Comments

[Richard Caldwell]

If a tax is charged to professional services all
it will do is cause customers to pay more
for the things they purchase from our clients.

Can they take the 5 cents of gasoline tax from the schools and give it back to the highway dept?

A half cent gasoline tax increase would not do much.

Are they going to tax medical services?

Do $1 cigarette tax increase and 10 cents on
sodas and other bottled drinks such as high
energy and water per container.

Hope this move gets killed.

[Aric Kram, CPA]

That's great, so they impose complicated tax laws and then when a business hires an accountant to comply with those laws they get taxed on that as well. Instead of taxing accounting services, Texas should use them to trim the waste out of their budget and get it balanced. Texas government grew faster than their revenue stream, so they need to shrink their expenditures. More taxes is not the answer, especially now.

[Alan Westheimer]

I could lose all the business I do outside Texas as clients would likely turn to CPAs in states that do not impose a sales tax on professional services rather than pay this penalty to do business with me. Or, alternatively, I would be forced to lower my fees to absorb the sales tax to remain competitive. A disaster in the making for us and I hope TSCPA will marshall its resources to oppose this proposal vigorously.

[Bob Owen]

While Rep. Guillen's has made these proposals in the press, he has not yet filed bills to try to implement them. TSCPA will be on alert for any such bills and oppose them vigorously. The good news so far is that there is very little support among other legislators for such ideas.