Focus Report, Volume 86, Number 3, August 2019 Page: 21
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* Proposition 9: Exempting precious
metals held in Texas depositories from
property taxes
HJR 95 by Capriglione (Fallon)Supporters say
Texas Constitution Art. 8, sec. 1 requires all real
and tangible personal property in the state to be taxed
in proportion to its value unless it is exempt. Under
Tax Code sec. 11.14(a), individuals are entitled to an
exemption from taxation of all tangible personal property,
other than manufactured homes, that is not held or used
for production of income. Under sec. 11.14(c), taxing
jurisdictions may rescind this exemption through a
resolution or order and tax the property.
In 2015, the Legislature created the Texas Bullion
Depository, under Government Code ch. 2116, to serve as
a custodian of deposits of precious metal from individuals
and entities. The depository is administered as a division
of the comptroller's office and operated by a private
entity overseen and audited by the comptroller. It began
accepting deposits in 2018 and is slated to open in its
permanent location in 2020.
Under Tax Code sec. 151.336, the sale of gold, silver,
or numismatic coins or of platinum, gold, or silver bullion
is exempted from sales taxes.
Digest
Proposition 9 would amend Texas Constitution Art.
8 to authorize the Legislature to exempt from property
taxes precious metal held in a precious metal depository in
Texas. The Legislature could define "precious metal" and
"precious metal depository" for purposes of the exemption.
The ballot proposal reads: "The constitutional
amendment authorizing the legislature to exempt from ad
valorem taxation precious metal held in a precious metal
depository located in this state."Proposition 9 would allow the state's precious metal
depositories to compete on an even footing with those in
other states that do not tax deposits of precious metals.
While Texas exempts certain precious metals from sales
taxes, these metals currently could be subject to local
ad valorem taxes if they are income-producing, and the
potential exists for local governments to override the
exemption for non-income-producing precious metals.
Proposition 9 would help the Texas Bullion Depository
and the state's other depositories succeed by allowing
the Legislature to create an exemption for both income-
producing and non-income-producing precious metals
stored in a Texas depository.
Proposition 9 would remove uncertainty about
whether local jurisdictions could tax non-income-
producing precious metals deposited in commercial
depositories. While current law exempts from property
taxes personal property not held or used to produce
income, local taxing jurisdictions have authority to rescind
this exemption. No local jurisdictions are known to have
done so to tax precious metal deposits, but the potential to
rescind this exemption could discourage the use of Texas
depositories by creating uncertainty for depositors.
Proposition 9 also would allow the Legislature to
create a property tax exemption for deposits of precious
metals held for the production of income so that they
were treated appropriately and not potentially subject to
ad valorem taxes. Precious metals held in depositories are
similar to other types of wealth, such as cash, and should
not be taxed as income-producing property. Because these
deposits generally are not taxed now, Proposition 9 would
not make a significant change to the system of property
tax exemptions. With Proposition 9, the state would
be making it possible for Texas depositories to competeBackground
House Research Organization
Page 21
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Texas. Legislature. House of Representatives. Research Organization. Focus Report, Volume 86, Number 3, August 2019, periodical, August 27, 2019; Austin, Texas. (https://texashistory.unt.edu/ark:/67531/metapth1364417/m1/21/?q=%22~1~1%22~1: accessed July 16, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu; crediting UNT Libraries Government Documents Department.