AUSTIN, Texas - Slapping a higher sales tax on Texans, in exchange for property tax cuts to help businesses, public safety and local schools: a swap deal Republican lawmakers are hoping to pass in the state legislature.
In a joint statement Wednesday, Governor Greg Abbott, Lieutenant Governor Dan Patrick and House Speaker Dennis Bonnen stated the following:
“Texans are fed up with skyrocketing property taxes. At the beginning of the legislative session, the Governor, Lt. Governor and Speaker laid out an agenda for property tax relief through the passage of Senate Bill 2 and House Bill 2 to limit property tax growth. In addition to that effort, today we are introducing a sales tax proposal to buy down property tax rates for all Texas homeowners and businesses, once Senate Bill 2 or House Bill 2 is agreed to and passed by both Chambers. If the one-cent increase in the sales tax passes, it will result in billions of dollars in revenue to help drive down property taxes in the short and long term.”
Dr. Jon Taylor is a political science professor at the University of St. Thomas.
"Sales tax is a flat tax. It's a regressive tax which means it impacts people with lower incomes," Taylor said.
According to Taylor, a higher sales tax could have a negative effect, from disproportionately hurting the poor, who are spending more of their paycheck at the stores, to potentially affecting jobs or employment numbers over time.
"It could have a huge ripple effect in that people aren't buying as many things, they're not going to the stores as much, which as a signaling device in economics means that if you have less people buying things, stores aren't going to hire as many people or keep as many people employed," Taylor said.
The proposed increase means Houstonians could see the sales tax jump from the current 8.25 to 9.25 percent when shopping, eating out, getting gas and paying for some services like cable or Internet.
The proposal would need bi-partisan support and require a constitutional amendment on the November ballot. Voters are split.
"People are moving out to Sugar Land, Pearland, other places. The money we would get on taxes aren't here anymore so when you have people leaving the cities and moving to the suburbs, suddenly the cities are overwhelmed," said Preston Middleton.
"The state doesn't need anymore money. They can tighten their belts. It doesn't take long before the people who are really poor, can't afford to stay. Their rents go up because the landlords go up in order to cover them," said Joy Boone.
In order for the proposal to pass, Senate Bill 2 and House Bill 2 need to be approved.
If the proposal passes, Dr. Taylor said Texas would then be bumped up to rank in the top five states in the country with the highest sales tax rates.