Report: Texas gave away billions in tax breaks to businesses Report: Texas gave away billions to businesses

AUSTIN — Business tax breaks cost Texas $4.3 billion in the last state budget, a figure that amounts to about a third of the state's massive revenue shortfall, according to a legislative report obtained on Friday by the Associated Press.

The report also found that local governments lost $235 billion in state property tax exemptions, including those given for elderly and disabled homeowners, according to the report prepared by the House Ways and Means Committee. A tally for sales tax exemptions - the state's biggest cash generator - was not available.

One of the largest carve-outs was for the natural gas tax, which totaled about $1 billion a year in exemptions, according to the report. An exemption for bottled water sales amounted to a loss of about $250 million a year for the state, while an exemption for corporations with business interest in solar energy devices cost more than $1 million over the last two years.

The committee prepared the report to address Republican House Speaker Joe Straus' charge to examine the exemptions and determine "how the current costs and benefits compare with the original legislative objectives," according to the report, which did not make recommendations about which tax exemptions should be repealed.

Rep. Rene Oliveira, chairman of the tax-writing committee, also did not say which exemptions he would favor for repeal, but said the report contains as much as $2 billion in "low hanging fruit."

"We should be looking at exemptions that should be repealed - whether it's a corporate welfare exemption . or whether it's a personal one - that the public policy that was the basis for it 10, 15, 20, 30 years ago no longer exists," Oliveira told the AP.

The Legislature is struggling to make up for a $15 billion revenue shortfall. But with a new Republican House supermajority that has largely opposed tax increases, initial budget drafts assume no new revenue and propose massive cuts to state services like education and health care for the poor, elderly and disabled.

"Before the election many of those exemptions could be on the table for consideration, now I don't know," Oliveira said. "There were certainly a significant amount of Democrats that would have joined me in the repeal of many of these exemptions, they're not here now.

"With the supermajority of Republicans, they're going to decide if we do any of these."

Exemptions in the state business tax - which include a break for small businesses - also included a carve-out for certain insurance companies that pay another levy on premiums. That exemption cost the state about $1 billion in the last two years.

The report also examined sales tax exemptions for aircraft sales, internet service, coin-operated machine sales and billboard advertising. It raised the possibility of taxing cosmetic surgeries and automotive repair and maintenance services.

Straus, along with Gov. Rick Perry and Lt. Gov. David Dewhurst, has said he opposes any tax increases.

"We haven't seen any specific legislation concerning exemptions, and the House members should first have an opportunity to review any legislation and discuss," Straus spokeswoman Tracy Young said Friday when asked if the speaker would support repealing any exemptions.