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<br />Economic Development Sales Tax. (96-302) <br /> <br />Page 5 of8 <br /> <br />the tax proceeds have been paid in full. A tax imposed for a specific project may also be <br />reimposed by an election. <br /> <br />Under ~4B <br />The S4B tax is effective until the city notifies the Revenue Accounting, Tax Allocation <br />Section of the Comptroller's Office to stop collecting the tax. A city can, on its own action <br />or as a result of an election, dissolve a S4B corporation. A city must continue assessing the <br />tax until all obligations incurred by the corporation, including principal and interest on <br />bonds, are satisfied. <br /> <br />What about tax increases or tax decreases? <br />Initiating Ordinance <br />If a city is already imposing a tax under this Act, the city's governing body may adopt an <br />ordinance calling for an election to increase or reduce the tax rate. <br /> <br />The ordinance may be initiated in either of two ways: <br /> <br />. by a majority vote of the governing body; or <br />. by petition of registered voters. <br /> <br />Petition Requirements <br />In order to change the rate ofa S4A tax, 10 percent or more of the registered voters, must <br />petition the city to call an election for that purpose. <br /> <br />Procedures for tax rate changes are not addressed under S4B, however, general provisions <br />of the Tax Code for calling an election may be used. Under these provisions, the city <br />council must call an election if a number of qualified voters of the municipality equal to at <br />least 20 percent of the number of votes cast in the most recent regular municipal election <br />petitions the governing body for a vote. <br /> <br />Certifying Petitions <br />If the election to adopt or change the tax rate is by petition, the governing body must <br />determine if the petition is sufficient within 30 days of receiving it. If the petition is <br />sufficient, the city must adopt the ordinance calling for the election within 60 days after <br />receiving it. (Refer to V.T.C.A., Tax Code S321.402) <br /> <br />Required Tax Rate Changes <br />As with adoption, the sales and use tax must be increased or decreased in increments of 1/8 <br />of 1 percent with a minimum of 1/8 of 1 percent and a maximum of 1/2 percent. However, a <br />city may not adopt a tax rate resulting in a combined rate of all local sales and use taxes <br />exceeding 2 percent. <br /> <br />Reducing or Abolishing a ~4A Tax and Adopting a ~4B Tax <br />If a city wants to hold an election to reduce or abolish its S4A sales tax and adopt a sales tax <br />under S4B, the city may address the two issues in a single ballot proposition. <br /> <br />http://www.window.state.tx.us/taxinfo/taxpubs/tx96 _ 302 .html <br /> <br />8/17/2004 <br />