Overall Vote Recommendation

Principle Criteria

Free Enterprise

Property Rights

Personal Responsibility

Limited Government

Individual Liberty

Digest

HB 3487 introduces a sales and use tax deduction for restaurant owners who participate in a qualified oyster shell recycling program. Under the bill, a food service establishment that collects and recycles oyster shells can deduct $2 for every 50 pounds of oyster shells recycled from their quarterly or monthly tax liability. The program must be recognized as a qualified oyster shell recycling program by the Texas Comptroller of Public Accounts.

The bill authorizes the Comptroller to set rules for implementing this tax incentive, including requiring restaurants to provide necessary documentation to validate the amount claimed. The Parks and Wildlife Department may be consulted when the rules are developed to ensure the program effectively contributes to oyster reef restoration efforts.

The proposed tax deduction becomes effective October 1, 2025, and does not affect any tax liabilities that arose before that date.

The original version of HB 3487 and the Committee Substitute both establish a tax incentive for restaurants participating in qualified oyster shell recycling programs. The primary objective remains the same: to encourage environmentally responsible practices by allowing restaurants to deduct $2 from their sales tax liability for every 50 pounds of oyster shells recycled. However, there are subtle but important differences between the two versions regarding implementation and oversight.

In the original version, the Texas Comptroller of Public Accounts has the authority to require information deemed necessary to verify the amount claimed by the taxpayer. The Committee Substitute retains this authority but emphasizes the collaboration between the Comptroller and the Parks and Wildlife Department to establish rules, ensuring that the recycling programs align with environmental goals. This added collaboration reflects an increased focus on ecological accuracy and relevance.

Both versions grant the Comptroller the ability to adopt rules necessary for the program's administration. However, the substitute version more explicitly mentions the potential consultation with the Parks and Wildlife Department, highlighting a stronger environmental oversight compared to the original.

Both versions set the effective date as October 1, 2025, and specify that the new provisions do not affect tax liabilities accrued before that date. There is no substantive change here, but the Committee Substitute clarifies continuity of enforcement for pre-existing liabilities.

The Committee Substitute refines the original bill by introducing a more structured approach to rulemaking and collaboration, particularly emphasizing the involvement of the Parks and Wildlife Department. This improvement aligns the program more closely with conservation goals, while the fundamental tax incentive mechanism remains consistent. The changes reflect a more integrated approach to environmental stewardship while maintaining the bill’s primary fiscal and practical objectives.

Author

Todd Hunter

Terri Leo-Wilson

Sponsor

Lois Kolkhorst

Co-Sponsor

Juan Hinojosa

Contact the Author

Rep. Todd Hunter

Capitol Phone:

(512) 463-0672

Capitol Office:

CAP 1W.6

E-Mail:

[email protected]

Visit Official Website

Fiscal Notes

According to the Legislative Budget Board (LBB), HB 3487 is expected to have no significant fiscal impact on the state. The bill allows restaurant owners who participate in a qualified oyster shell recycling program to deduct $2 for every 50 pounds of oyster shells recycled from their sales and use tax liability. This incentive is designed to encourage environmentally responsible practices while supporting oyster reef restoration efforts.

The Texas Comptroller of Public Accounts estimates that the reduction in tax collections due to this deduction would be minimal. This projection is based on data from the Texas Parks and Wildlife Department, which indicates that there are currently only two large-scale oyster shell recycling facilities in the state. Given the limited number of recycling operations and the niche nature of the practice, the potential revenue loss from participating restaurants is expected to be negligible.

The LBB also notes that there is no significant fiscal impact expected for local governments. Since the bill primarily affects state-level tax revenue, local tax bases will not experience noticeable changes as a result of the proposed deduction.

The bill would take effect on October 1, 2025, and would not affect any tax liabilities accrued before that date.

In summary, HB 3487 is fiscally neutral and primarily aims to support environmental initiatives without imposing a significant financial burden on the state or local entities.

Vote Recommendation Notes

While the bill is a tax break and it aims to promote environmental stewardship, it effectively acts as a subsidy for the oyster shell recycling industry by shifting the cost burden from businesses to taxpayers. The incentive creates a direct financial benefit for a specific industry, without clearly demonstrating that public funds should be used to support private recycling operations. This undermines the principle of free enterprise, as it distorts the market by artificially lowering costs for participating businesses.

Subsidizing one specific recycling activity through tax breaks favors certain businesses over others, creating market inequity. The principle of free enterprise suggests that businesses should thrive or fail based on market demand and efficiency, not on selective government incentives.

Additionally, the bill conflicts with limited government principles by using the tax code as a tool for environmental engineering rather than maintaining a neutral tax policy. By granting a tax break to restaurants that participate in oyster shell recycling, the state is effectively picking winners and losers within the restaurant industry and the broader recycling market.

While oyster shell recycling has clear environmental benefits, the private sector and nonprofit organizations are better positioned to develop sustainable practices without taxpayer intervention. The bill sets a problematic precedent for government involvement in private recycling efforts, opening the door to future subsidies for other niche environmental initiatives.

Due to its nature as a government subsidy for a specific recycling program, HB 3487 fails to align with core principles of free enterprise and limited government. It distorts the market, places an unjustified financial burden on taxpayers, and reflects government overreach in directing private business practices. Texas Policy Research recommends that lawmakers vote NO on HB 3487.

Individual Liberty: While the bill does not directly restrict individual freedoms, it indirectly impacts liberty by using taxpayer money to subsidize specific business practices. It incentivizes certain restaurant owners to participate in oyster shell recycling, effectively using public funds to shape private decisions. Although participation is voluntary, the preferential treatment of businesses engaged in this activity could be seen as favoring some business owners over others based on their environmental practices. This indirectly reduces economic freedom by creating market biases.
Personal Responsibility: The bill undermines personal responsibility by shifting the financial burden of recycling from the business owner to the taxpayer. Instead of encouraging restaurants to voluntarily bear the cost of environmental stewardship, it rewards businesses with a tax break for actions that should be driven by individual or corporate responsibility. This approach weakens the concept of taking personal initiative to support conservation efforts without relying on government incentives.
Free Enterprise: HB 3487 acts as a subsidy for the recycling industry, which directly contradicts the principle of free enterprise. By providing a tax deduction specifically for oyster shell recycling, the bill distorts the market by giving financial advantages to restaurants that participate, potentially disadvantaging others that do not. This kind of selective government intervention interferes with the natural competition between businesses. In a truly free market, businesses would engage in environmentally friendly practices if consumer demand or personal ethics justified the cost, rather than relying on state support.
Private Property Rights: The bill does not directly impact private property rights, as it primarily concerns tax policy rather than property usage or ownership. However, it indirectly influences how business owners manage their operations by incentivizing specific environmental practices, which could be seen as nudging private decisions through public policy.
Limited Government: The bill expands government influence by using tax policy to shape environmental behavior in the private sector. Instead of maintaining a neutral stance on business practices, the state intervenes by providing financial incentives to a specific subset of restaurants that choose to recycle oyster shells. This type of targeted subsidy reflects government overreach, as it utilizes public funds to indirectly support private environmental efforts. A limited government approach would avoid directly subsidizing private actions, allowing the market and community initiatives to drive conservation.

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