2012 -- H 7724

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LC01514

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STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2012

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A N A C T

RELATING TO TAXATION - TAX PREFERENCES

     Introduced By: Representatives Tanzi, Valencia, Marcello, Savage, and Ehrhardt

     Date Introduced: February 16, 2012

     Referred To: House Finance

It is enacted by the General Assembly as follows:

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     SECTION 1. Title 44 of the General Laws entitled "TAXATION" is hereby amended by

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adding thereto the following chapter:

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     CHAPTER 68

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TAX PREFERENCES

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     44-68-1. Declaration of intent. – Whereas, existing law imposes various taxes and

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allows specific credits, deductions, exclusions, and exemptions in computing those taxes; and

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     Whereas, there is neither systematic nor comprehensive review of these credits,

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deductions, exclusion, and exemptions; and

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     Whereas, it is the intent of the general assembly to develop an efficient tax infrastructure

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utilizing tax credits which encourage investments; now, therefore

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     The general assembly determines that it is in the best interest of the citizens of the state to

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provide for a periodic review of these credits, deductions, exclusion, and exemptions.

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     44-68-2 Findings.- The general assembly finds and declares:

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     (1) That government at all levels enacts tax preferences to promote equity among

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taxpayers and enhance economic growth in a way that is inexpensive to administer and provides

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direct benefits to taxpayers.

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     (2) That national and state public finance experts recommend that tax preferences be

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evaluated alongside direct spending programs, as both are public initiatives meant to accomplish

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specified goals.

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     (3) That revenue losses attributable to tax preferences constitute a significant amount of

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states spending, exceeding over one billion, five hundred million dollars ($1,500,000,000)

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annually.

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     (4) That many current tax preferences contain neither sunset provisions, nor goals and

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objectives to measure the performance of the tax preference.

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     (5) That many current tax preferences neither require taxpayers to submit data

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demonstrating the tax preferences' effectiveness, nor for state agencies to collect and send data to

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the general assembly to evaluate the tax preference.

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     (6) The general assembly should apply the same level of review and performance

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measure that it applies to spending programs to tax preference programs, including tax credits.

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     44-68-3 Tax preference requirements.- Notwithstanding any other law to the contrary,

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any bill enacted on or after January 1, 2012, that would authorize a preference against any tax

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imposed by this title shall contain all of the following:

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     (1) Specific goals, purposes and objectives that the tax preference will achieve; and

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     (2) Detailed performance indicators for the general assembly to use when measuring

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whether the tax preference meets the goals, purposes and objectives stated in the bill; and

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     (3) Data collection requirements to enable the general assembly to determine whether the

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tax preference is meeting, failing to meet or exceeding those specific goals, purposes and

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objectives. The requirements shall include the specific data and baseline measurements to be

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collected and remitted in each year the preference is effective for the general assembly to measure

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the change in performance indicators, and the specific taxpayers, state agencies or other entities

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required to collect and the remit data; and

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     (4) A requirement that the tax preference shall be repealed on the first day of January

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next following the fifth anniversary of its effective date.

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     SECTION 2. This act shall take effect upon passage.

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LC01514

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N A C T

RELATING TO TAXATION - TAX PREFERENCES

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     This act would require any bill authorizing a tax preference enacted after January 1, 2012

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to contain specific goals and objectives and provide for detailed performance indicators to allow

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the general assembly to measure whether the tax preference has met its goal, purpose and

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objective. This act would further provide that the tax preference would be repealed on the first

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January next following the fifth anniversary of its effective date.

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     This act would take effect upon passage.

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LC01514

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