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<br />Economic Development Sales r~ (96-302) <br /> <br />Page 1 of8 <br /> <br />W[;';[lOW' 0;'; ST:'JI GO\ 'ERN;"lE.\ T <br /> <br />C."'ROl.E KEETO\ STRAYHORN T<:::\:3, ComplTlIlI<::r of Public .-\CC.)I.Int;; <br /> <br />SEARCH ~ <br /> <br />Texas Taxes <br /> <br />Tax Pu blications <br /> <br />EconoInic DevelopInent Sales Tax <br />June 2004 <br /> <br />Voters in many Texas cities have the option of imposing a local sales and use tax to help <br />finance their communities' economic development efforts. <br /> <br />These cities may adopt an economic development sales tax rate of 1/8, 1/4,318 or 1/2 of 1 <br />percent if the new total rate of all local sales and use taxes would not exceed 2 percent. <br />They also may limit the duration of the tax and the use of the funds. <br /> <br />Who is eligible? <br /> <br />~4A Sales Tax <br />All cities located in a county with a population ofless than 500,000 may impose the tax <br />under ~4A if the new combined local sales tax rate would not exceed 2 percent. <br /> <br />Some cities located in counties with a population of 500,000 or more (Bexar, Dallas, El <br />Paso, Harris, Hidalgo, Tarrant and Travis), also may use ~4A for economic development <br />efforts but a city's eligibility varies from county to county. For information on which cities <br />are eligible in these counties, call the Comptroller's Local Government Assistance section <br />toll free at 1-800-531-5441, ext. 3-4679. <br /> <br />~4B Sales Tax <br />As of2001, all cities are eligible to adopt the ~4B tax ifthe combined local sales tax rate <br />would not exceed 2 percent. <br /> <br />How is the tax administered? <br />Development Corporations <br /> <br />Under both ~4A and ~4B, the Development Corporation Act has a unique provision that <br />requires cities to establish a corporation to administer the sales and use tax funds. <br /> <br />The corporation must file articles of incorporation with the Secretary of State. The articles <br />of incorporation must state that the corporation is governed under Vernon's Ann.Civ.St. art. <br />5190.6, ~4A or art. 5190.6, ~4B of the Development Corporation Act of 1979. <br /> <br />Board of Directors <br /> <br />http://www.window.state.tx.us/taxinfo/taxpubs/tx96 _ 302 .html <br /> <br />8/1712004 <br />