Proposed Texas Senate bill would exempt textbook purchases from sales tax

Joshua Fechter

A bill in the Texas Senate would allow students to purchase textbooks without paying sales tax during two 10-day periods every year.

The bill, introduced by state Sen. Judith Zaffirini, D-Laredo, would exempt textbook purchases from sales tax from the third Friday in August to the second following Sunday and from the second Friday in January to the second following Sunday.

Students would have to verify their status as full-time or part-time students by presenting identification issued by the institution they attend to the retailer.

George Mitchell, University Co-op CEO and president, has testified in favor of similar legislation during previous legislative sessions. Mitchell said the bill would help students save money when purchasing textbooks.

Mitchell said he lobbied for the bill because it would make the Co-op competitive with online retailers who did not have to include sales tax in purchases prior to the Texas Legislature’s 2011 decision requiring online retailers to charge sales tax.

“Online companies that are out-of-state did not have to charge sales tax, thus, had advantage over us,” Mitchell said.

Mitchell said the proposed tax holiday would increase sales at the Co-op, which made an estimated $20 million in revenue from textbook sales during January 2011, August 2011 and January 2012. Approximately $1.6 million of that revenue went to the state in the form of sales tax.

The bill would require the state comptroller to establish methods for patrons to identify themselves as students when purchasing textbooks from online retailers, but does not specify those methods.

In 2010-2011, students nationwide spent an average of $449 on textbooks in campus bookstores or online, according to data provided by the National Association of College Stores.

Members of the legislature have introduced similar bills during previous sessions, but those bills were left pending in committees.

Zaffirini introduced a bill in 2011 that would have instituted the tax holiday during the same time period. The bill was left pending in the Senate Finance Committee after a study from the Legislative Budget Board found the bill would cost the state an estimated $150,100,000 in lost revenue from fiscal years 2011 to 2016. The same study concluded Texas cities would lose an estimated $28.3 million over the same period if the bill was implemented.

Zaffirini introduced a similar bill in 2009 that was referred to the Finance Committee where it received the same treatment as its 2011 counterpart.

Efforts to reach Zaffirini to discuss the bill were unsuccessful.

State Rep. Roberto Alonzo, D-Dallas, introduced a bill in 2009 that would have instituted two month-long periods during which textbooks would be exempted from
sales tax, but it did not make it out of the House Ways and Means Committee.

In 2011, Alonzo introduced a bill that would have completely exempted textbook purchases from sales tax year-round, but the bill did not pass the House Higher Education Committee.

Printed on Friday, November 30, 2012 as: Proposed bill could lead to no sales tax on textbooks