Commerce, Texas, Reinstates Sales Tax on Gas And Electric Services

A 1.5 percent sales tax on gas and electric services was reinstated upon second reading at a meeting of the Commerce (Texas) City Council on December 13, according to a report in The Commerce Journal.

According to the Texas Comptroller’s Office, House Bill 1, enacted in 1978, exempted residential use of natural gas and electricity from “most” sales and use taxes. However, the legislation also included a grandfather clause that authorized any city that imposed a sales tax prior to October 1, 1979, to either retain the tax by ordinance on or before May 1, 1979; or to reimpose the tax at any time after May 1, 1979.

According to Commerce City Manager Derrek Ferrell, more than 900 cities were exempted from the sales tax at that time. Commerce was one of fewer than 200 cities that had yet to reimpose the tax since 1979, the local news outlet reported.

There are 1,425 residential gas customers in Commerce, the City Council stated. The average monthly residential gas bill is $52.72. With the new tax, the tax on an average monthly bill would be $0.79. This would provide an average monthly revenue of $1,123.68 to the city.

The same 1.5 percent rate would apply to electric services, but the average cost is not as easy to determine, the council said, because there are many providers.

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