Texas sales tax transparency

by Chuck August 29, 2012

Texas sales tax

Texas sales tax

Texas sales tax transparency is more important than ever because Texas has one of the most difficult-to-understand sales tax structures in the modern United States.  Individual municipalities and various public agencies are encouraged to fund themselves by creating special-purpose tax districts  – virtually willy-nilly – sometimes resulting in dozens of overlapping jurisdictions with poorly defined boundaries.Texas sales tax jurisdictions

Take Harris County for example. This single county is home to Houston and hosts no less than 72 different sales tax entities. Aside from 34 city jurisdictions, Harris county has special tax districts for transit, airline improvement, crime control, emergency services, fire, general improvement, management, and municipal development.

Since sales taxes made up nearly a quarter of all state revenue in 2011, one would think there would be a vested interest in making it simple to collect and distribute. This doesn’t seem to be the case, however, since both state and city governments have been unable to comply with repeated requests to define the tax jurisdictions. A Texas comptroller web page states, “With so many entities layered upon each other, usually with overlapping boundaries, it can be difficult to identify all of the entities collecting local taxes in any given location.”

When Zip2Tax asked for jurisdictional boundary maps, we were instructed to contact individual districts for information. As a result, our staff spent months attempting to get answers from the individuals listed as district contacts. Generally, our repeated e-mails and phone messages were ignored, while the representatives who did respond said something to the effect of “no such map exists” or “go to the state’s web site and type in the address you want to know about.”

I’ve heard that when you find yourself in a hole, the first thing to do is to stop digging.

We quickly decided not to attempt to manually type in every address in the longhorn state with a population of more than 26 million. Since there was no simple answer to the question “which span of addresses fall inside your district,” the task was declared virtually impossible and mothballed.

Some may think the Texas “total tax cap” a good compromise which eliminates any real need to define the exact districts involved. The tax cap consists of a 6.25% state tax with a total combined district tax that maxes out at 2% (for a total which cannot exceed 8.25% in any location). But this is an unsatisfactory answer for any individual who wants to know how their tax dollars are being spent, not to mention these public agencies that want to be assured that the state is remitting to them the proper amount of taxes collected.

Texas seems to be aware that a problem exists and recently expanded a web site called TexasTransparency.com. While not providing any greater insight into jurisdictional boundaries, the site does go to some pains to make revenue structures more clear, at least on a macro scale.

The site is geared at educating the Texas taxpayer as well as encouraging local governments to open the books. Subsections include “Texas, It’s Your Money: Find out who is taxing you and for what purpose,” “Where the Money Comes From,” and Local Government Transparency.”

So it’s possible the knee-jerk reaction of the state saying  to “Go ask the district,” and the district’s reply of “I don’t know. Go ask the state” might eventually become a thing of the past.

Find out more about sales and use taxes in Texas or visit TexasTransparency.org .

Charles F. Spielmann
Chuck
Chuck


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