MOTOR V E H I C L E SA L ES AND R ENTA L TAX ES E N A C T E D 1 9 4 1 The motor vehicle sales and use tax, the largest tax in this category, is imposed on the retail sales price, less trade-in allowance, of motor vehicles sold in Texas. The motor vehicle rental tax is levied as a percentage of gross receipts derived from the rental of a vehicle, at a rate that varies depending on the length of the rental. In November 2015, voters approved a constitutional amendment to deposit 35 percent of the net annual revenue from these taxes above $5 billion to the State Highway Fund, starting in fiscal 2020. The $5 billion threshold was first reached in fiscal 2021 with a transfer of $237 million, and the transfer is projected to total $635 million in the 2022-23 biennium. Percentage of Total Tax Collection F I SCA L 20 21 All Funds, Excluding Trusts $5.73 BILLION MOTOR VEHICLE SALES & RENTAL TAXES COLLEC T IONS All Funds, Excluding Trusts (billions) $0 $1 $2 $4 $5 $6 $3 $5.97 A C T U A L E S T I MAT E D 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 REVENUE BY SOURC E TAX FUND FISCAL 2021 Motor Vehicle Sales and Use Tax General Revenue Fund1 $5,163,385,145 Property Tax Relief Fund2 $29,605,842 GR Account - Emissions Reduction Plan3 $18,505,880 Motor Vehicle Rental Tax General Revenue Fund $298,847,607 Motor Vehicle Sales and Use Tax – Seller-Financed Motor Vehicles General Revenue Fund $185,407,286 GR Account - Emissions Reduction Plan3 $27,335 Manufactured Housing Sales and Use Tax General Revenue Fund $35,154,174 Motor Vehicle Sales and Use Tax - Motor Carriers4 General Revenue Fund $269 TOTAL5 $5,730,933,538 FOOTNOTES 1 Since fiscal 2015, 95 percent of revenue is deposited into the General Revenue Fund; the remaining 5 percent is retained by counties. 2 Revenue derived from the tax based on a used vehicle’s presumptive value is deposited into the Property Tax Relief Fund. 3 100 percent of applicable surcharge is required to be transferred into GR Account – Emissions Reduction Plan. Beginning Sept. 1, 2021, all revenue that was deposited into the TERP account is allocated to a trust fund outside the State Treasury. 4 Repealed by S.B. 3, 74th Leg., R.S. effective Sept. 1, 1997. 5 May not sum due to rounding. 6 The 6.25 percent sales and use tax is based on the vehicle sales price less any trade-in. Additional taxes or surcharges may apply to the sale of certain diesel trucks. Rentals are taxed at 10 percent of gross receipts for rentals of 30 days or less and at 6.25 percent for rentals of 31 to 180 days. Manufactured housing sales are taxed at 5 percent of 65 percent of the sales price on the initial sale or use of a new manufactured home. 7 Estimated initial distribution of total motor vehicle sales tax revenue in fiscal 2023, as projected in the December 2020 Tax Exemptions and Tax Incidence Report. H I STOR I CAL VOLAT I L I T Y Year-over-year Change, All Funds, Excluding Trusts Compound Annual Growth Rate (Fiscal 2012-2021): 5.4% -5% 0% 5% 10% 15% 20% 8.5% 7.2% 2.3% -1.8% 9.7% -3.9% 0.7% 9.0% 19.0% FISCAL 2015 2014 2013 2019 2020 2018 2017 2016 2021 H I G H L I G H T S REVENUE FISCAL 2021 $5.73B STATE RATE 6.25%6 LOCAL RATE NONE FEDERAL RATE NONE WHO PAYS?7 BUSINESS 40.5% CONSUMER 59.5% 9.3% MOTOR F U E L TAX ES E N A C T E D 1 9 2 3 Motor fuel taxes are the state’s consumption taxes on gasoline, diesel fuel and liquefied and compressed natural gas. In general, these taxes are charged on each gallon of fuel sold in Texas used to propel vehicles on Texas’ public roads. The rates for the gasoline and diesel fuel taxes last changed in 1991, when they were both increased from 15 cents to 20 cents per gallon. Percentage of Total Tax Collection F I SCA L 20 21 All Funds, Excluding Trusts $3.6 BILLION MOTOR FUEL TAXES COLLEC T IONS All Funds, Excluding Trusts (billions) $0 $1 $2 $4 $3 $3.73 A C T U A L E S T I MAT E D 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 REVENUE BY SOURC E TAX FUND FISCAL 2021 Gasoline Tax1 General Revenue Fund $2,626,158,320 Diesel Fuel Tax2 General Revenue Fund $964,923,804 Liquefied and Compressed Natural Gas Tax2 General Revenue Fund $5,809,446 TOTAL3 $3,596,891,570 FOOTNOTES 1 After deductions for refunds and other purposes, 25 percent is allocated to the Available School Fund; 50 percent is allocated to the State Highway Fund; and the remaining 25 percent also is deposited to the State Highway Fund, except that the first $7.3 million is deposited to the County and Road District Highway Fund. 2 After deductions for refunds, 25 percent is allocated to the Available School Fund and 75 percent is allocated to the State Highway Fund. 3 May not sum due to rounding. 4 This rate is for gasoline and diesel fuel (eligible transit companies qualify for a refund of 1 cent per gallon on gasoline and 1/2 cent per gallon on diesel fuel). Liquefied natural gas and compressed natural gas are taxed at 15 cents per gallon. 5 This rate is for gasoline. The federal tax rate for diesel fuel is 24.4 cents per gallon. 6 Estimated initial distribution of total gasoline tax revenue in fiscal 2023, as projected in the December 2020 Tax Exemptions and Tax Incidence Report. H I STOR I CAL VOLAT I L I T Y Year-over-year Change, All Funds, Excluding Trusts Compound Annual Growth Rate (Fiscal 2012-2021): 1.4% -6% -5% -4% -3% -2% -1% 0% 1% 2% 3% 4% 1.6% 2.9% 3.9% 2.0% 2.0% 2.5% -5.8% 1.9% 2.0% FISCAL 2015 2014 2013 2019 2020 2018 2017 2016 2021 H I G H L I G H T S REVENUE FISCAL 2021 $3.6B STATE RATE $ 0.204 PER GALLON LOCAL RATE NONE FEDERAL RATE $0.184 5 PER GALLON WHO PAYS?6 BUSINESS 21.9% CONSUMER 78.1% 5.9% 27 SPRING 2022
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