Texas Comptroller Susan Combs said last week that the state’s expanded business tax has generated $4.2 billion through June 24, making it unlikely total collections will reach the earlier estimate of $5.9 billion in the current fiscal year that ends Aug. 31.
Final totals are not expected until November.
“It is still too early to tell what the final franchise tax revenue number will be for this fiscal year, as the first year of a revised tax can be somewhat unpredictable without a previous road map,” said R.J. DeSilva, spokesman for the comptroller’s office. “We expect more revenue to be collected in August and November as extension filers settle up their reports.”
The existing franchise tax was revised by the Legislature in 2006 as part of a package that lowered local school property tax rates. The first returns were due June 16.
An estimated 900,000 Texas firms must file returns, with some 500,000 in before the deadline. The comptroller’s office said 46,000 filers sought an extension.
The expanded tax is based on gross receipts, with business paying 1% or 0.5% of gross receipts, depending on the type of business.
The new tax is an important component in the $14.2 billion property-tax relief package for local schools approved by Texas lawmakers in 2007.
New state taxes are expected to make up about $8.3 billion of the total reduction, with about $6 billion to be covered by other funds in the budget.
The business tax was expected to bring in $5.9 billion, with $2.8 billion going to the general fund and $3.1 billion used to offset the legislatively mandated decline in property tax collections.