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Saturday, October 5, 2013

Texas eliminates sales tax on precious metals coins

Landmark legislation, which went into effect Tuesday in Texas, completely eliminates all taxation of precious metals on the grounds that gold and silver can be considered a currency. 

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Author: Dorothy Kosich
Posted: Wednesday , 02 Oct 2013 

As of October 1, the sales tax levied on purchases of gold, silver and platinum bullion and numismatic coins in Texas is now eliminated. It is the first time that a state has expanded an existing sales tax exemption for gold and silver.

Previously, Texans were paying 6.25% on all precious metals purchases under $1,000, a tax that was considered especially burdensome to small investors. Gov. Rick Perry signed H.B. 78 into law on June 14.

The legislation puts precious metals on a level playing field with other investments. Proponents of the legislation had asserted the exemption would attract coin shows, auctions and other events to Texas.

It also gives precious metals consumers an incentive to do business with Texas dealers, rather than order from out-of-state dealers over the internet.

The American Principles Project, along with the American Open Currency Standard, were advocates for the legislation based on the principle that gold and silver are money and, therefore, should not be taxed. “Hard currencies have intrinsic value,” asserts AOCS’s website. “Even in the unlikely event that everyone else stops using the currency, the merchant is left with coins made of silver or gold. Failure is much less likely with a hard currency to begin with. Most paper currencies fail due to inflation and the crisis in confidence that accompanies it. Hard currencies today are virtually inflation-proof.”

Earlier this year, Louisiana became the second U.S. state to enact legislation to eliminate the sales tax on gold and silver coins and bullion. The sales tax, which is 4% in Louisiana, was eliminated on gold and silver purchases beginning on August 1. Louisiana Gov. Bobby Jindal signed H.B. 682, a bill identical to the Texas legislation, during the last week of June.

With Texas, Louisiana and Utah having passed hard-money related legislation this year, the American Principals Project contends, “there is an opportunity for follow-on bills to help make hard money functional. This includes regulating depository institutions that accept precious metals and enabling states to hold and transact in gold and silver currency.”

“We envision a near-term future in which citizens can get their state tax refund in American Eagle gold coins,” said the project.

In an October 4th e-mail to Mineweb, Mike Fuljez of Universal Coin & Bullion in Beaumont,Texas and Paul Hollis of Paul Hollis Rare Coins in Mandeveille, Louisiana said they are responsible for changes in legislation in three states, with the assistant and support from the Industry Council for Tangible Assets (ICTA), a national association for businesses that buy and sell rare coins and precious metals.

Fuljenz worked with Texas Rep. David Simpson and organized major Texas coin dealers to make their case to the Texas legislature. Hollis is a member of the Louisiana House of Representatives and guided the Louisiana bill through the legislature. Both Fuljenz and Hollis are members of ICTA's Board of Directors.

"Some of the strongest points used in both Texas and Louisiana to achieve passage of the expansion of the state sales tax exemption are that 1) rare coin/precious metals products must be available to consumers as an investment option on a playing field level with other investments that are not subject to sales tax; 2) the exemption keeps business in-state and attracts coin shows, auctions and other events to the state; 3) by keeping more advertising and business in-state, consumers can establish relationships with local merchants which offers a level of protection not found with out-of-state internet, TV or telephone purchases; and 4) it helps smaller savers and investors," Fuljenz noted.

The website noted that gold and silver coins, including those minted by the U.S. government are currently taxed in 28 states. 

However, it should be also noted that 22 other states already did not tax gold and silver coins.

“It makes no legal or economic sense for states to tax gold and silver coins,” says the website. “Ending this taxation to enable them to circulate as currency is one of the prime goals of the state legal tender movement.”

SOURCE mineweb