The Texas Public Policy Foundation applauds the Texas Senate’s approval yesterday of HB 735, which will finally kill off the unnecessary Telecommunications Infrastructure Fund (TIF) tax.

“The TIF’s mission was completed four years ago but Texans still pay the tax on every bill,” said Foundation chief economist Byron Schlomach. “This is an opportunity for the Legislature to do the right thing – return some of the budget surplus to the taxpayers and give them a break on a tax that has already outlived its intended purpose.”

The TIF was created in 1995 as a 10-year project to extend high-speed Internet infrastructure to schools, libraries, and hospitals. The TIF’s funding came from a 1.25% tax on phone bills that was to automatically expire in 2005. In 2003, the Legislature determined that the TIF’s mission was complete, but rather than canceling the tax, it transferred the funds collected into a technology allotment for public education. In 2005, the Legislature extended the tax again, depositing the proceeds into the state’s general revenue account.

Two months ago, the House unanimously approved HB 735 by Rep. Joe Straus, which would eliminate the TIF as of September 1, 2007. Sen. Tommy Williams sponsored the bill in the Senate.

While the Foundation appreciates the Senate’s approval of this bill, it still prefers the House version of the bill that would eliminate the tax in September 2007 rather than the Senate’s date of September 2008.

“With an $8 billion cash balance, the state does not need to collect another $210 million in TIF taxes from Texas consumers,” Schlomach said. “The Legislature should end this tax without delay.”

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