TYLER, TX (KLTV) - Texas Governor Greg Abbott is calling for an increase in the state’s sales tax rate. If the proposal goes through, it would be the first hike in almost 30 years. GOP leaders say that’s only if lawmakers agree to limit local property tax increases.
“I’m not hopeful that it’s a good approach for them,” UT Tyler Professor Harold Doty said. “I understand their need to constrain property taxes, but I think there are better ways to go about that.”
The proposed increase would raise the state’s sales tax from it’s current rate of 6.25% to 7.25%, and Doty says those at the bottom will feel the biggest effects.
“It’s going to tend to shift the tax burden to lower income people,” Doty said. “It’s also going to have a slight negative effect on our economy, because it’s going to exchange some of that money that was spent for goods and services into the state’s tax coffers.”
Governor Abbott says the proposal would buy down property tax rates and if passed it would result in billions of dollars in revenue to help drive down property taxes.
“It has to be a dollar decrease in our property taxes for every dollar increased in sales taxes,” Rep. Matt Schaefer said. “That’s the only way I would support it.”
Rep. Matt Schaefer (R) of Tyler says he likes the concept, but if the proposal makes it to the house floor he wants more than promises.
“And you have to have a firm lid on property taxes to keep them from growing and washing out property tax relief," Schaefer said.
If the increase were to go through, Texas would be tied with California for the highest rate in the country. The proposal first has to make it through the legislature. Once that happens, voters will still have to sign off on the increase before it would take effect.