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REQUEST FOR CITY COUNCIL AGENDA ITEM <br />AGENDA DATE REQUESTED January 22. 1990 <br />REQUESTED BY Jeff Litchfield DEPARTMENT Director of Finance <br />REPORT RESOLUTION X ORDINANCE <br />EXHIBITS: Ordinance <br />SUMMARY AND RECOMMENDATION <br />Current State law provides that telecommunications services are exempt from local <br />sales tax. State law also provides the means for a City to repeal the exemption <br />if it so desires. <br />I spoke with the State Comptroller's Office and found that the services that <br />would be taxed are primarily long-distance telecommunication services that <br />originate and end in Texas. <br />The City of La Porte has a 1% Local Option Sales Tax. If the City were to repeal <br />the exemption, its citizens would incur a 1% increase in their in-state long <br />distance service. This 1% tax would be collected by the State and then passed on <br />to the City. <br />A rough estimation of revenues the City of La Porte could expect to receive from <br />this new tax is X30,000 to X35,000 per year. The X30,000 to X35,000 per year in <br />revenue represents 1/4 percent of the General Fund Revenues. <br />To implement the telecommunications tax, the City of La Porte would need to pass <br />an ordinance repealing the telecommunication exemption. <br />ACTION REQUIRED BY COUNCIL: <br />Approve ar disapprove Ordinance. <br />AVAILABILITY OF FUNDS: <br />GENERAL FUND <br />ACCOUNT NUMBER: <br />UTILITY FUND <br />FUNDS AVAILABLE: <br />OTHER <br />YES NO <br />APPROVED FOR CITY COUNCIL AGENDA <br />C2a T. ~ - l ~ - 9 d <br />ROBERT T HERRERA DATE <br />CITY MANAGER <br />