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KEEP CHAPTER 313
Chapter 313 of our tax code provides temporary property tax discounts that attract major projects to Texas and create thousands of jobs – without raising taxes for anyone else.
The legislature must renew Chapter 313 for Texas to remain competitive.
Without Chapter 313, Texas will lose jobs to other states.
WHAT IS CHAPTER 313?
Chapter 313 of the Tax Code allows school districts to attract new major industrial development projects by offering a temporary and limited tax discount against a portion of their school property tax bill. These limited discounts have successfully attracted new projects to Texas without raising taxes on existing property and led to thousands of new manufacturing jobs — with more jobs coming in the next few years, helping to make Texas number one among the states for economic growth.
Chapter 313 is set to expire and must be renewed by the legislature during the 2021 legislative session for Texas to remain competitive with other states. Other states offer these incentives. Texas will lose its competitive edge in attracting investments without Chapter 313.
Growing the state’s manufacturing base is a good way to create sustained, long-term jobs and future local tax revenue. Texas needs Chapter 313 to attract manufacturing investment.
WHY DOES TEXAS NEED CHAPTER 313?
Almost every other state offers similar discounts, even though their property taxes are much, much lower than those in Texas. Texas property taxes on industrial projects are the 4th highest of any state – 61% higher than the national average.
High property taxes create a huge barrier to new investment, particularly capital-intensive investments like manufacturing plants. If Chapter 313 is allowed to expire, Texas will lose major projects and jobs to other states. The continuation of Chapter 313 is imperative for Texas to attract investment and stay competitive.
Given Texas’ high property taxes, Chapter 313 is the state’s most important economic development tool to attract new investment, grow local tax bases, and create new jobs.
HOW DOES CHAPTER 313 WORK?
Chapter 313 provides certain new projects with a temporary and limited discount from school property taxes for maintenance and operations. The discount is temporary as it can last no more than ten years. The discount is limited, because projects may be taxed on as much as $100 million of the value of the plant. Further, the discount is generally limited to manufacturing and renewable energy projects. And when the discount period is over, the property goes onto the local tax rolls at its full value, growing the school district’s tax base, generating funds for teacher salaries, new schools, and improved facilities.
Projects are not exempt from debt service taxes. The addition to the local tax base results in lower debt tax rates as soon as a new project starts up.
Chapter 313 has been used by Texas school districts to bring or encourage the expansion of businesses such as Samsung, Toyota, Telsa, and Texas Instruments, creating thousands of jobs and millions of dollars in local economic revenue.
Limited tax discounts are a win-win-win proposition as:
- schools get more money so they can pay teachers a more competitive salary,
- businesses can better afford to buy equipment and materials they need for their investment in communities, and
- taxpayers get lower debt service taxes.
CHAPTER 313 DOES NOT INCREASE TAXES ON OTHER PROPERTIES.
Chapter 313 applies only to NEW investment and cannot be used to exempt existing facilities. Chapter 313 can only ADD to school districts’ tax bases. The temporary property tax discount on a new property does not increase property taxes on other properties.