2016 -- H 7558

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LC004632

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2016

____________

A N   A C T

RELATING TO TAXATION -- TAX PREFERENCES

     Introduced By: Representatives Tanzi, Newberry, Shekarchi, Carson, and O`Grady

     Date Introduced: February 11, 2016

     Referred To: House Finance

     It is enacted by the General Assembly as follows:

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

adding thereto the following chapter:

CHAPTER 70

TAX PREFERENCES

     44-70-1. Declaration of intent. -- Whereas, existing law imposes various taxes and

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

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

deductions, exclusions, and exemptions; and

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

utilizing tax credits which encourage investments; now, therefore

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

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

     44-70-2. Findings. -- The general assembly finds and declares:

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

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

direct benefits to taxpayers.

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

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

specified goals.

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

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

annually.

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

objectives to measure the performance of the tax preference.

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

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

the general assembly to evaluate the tax preference.

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

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

     44-70-3. Tax preference requirements. -- Notwithstanding any other law to the

contrary, any law enacted on or after January 1, 2017, that would authorize a preference against

any tax imposed by this title shall contain all of the following:

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

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

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

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

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

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

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

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

required to collect and remit the data; and

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

next following the fifth anniversary of its effective date.

     SECTION 2. This act shall take effect upon passage.

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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 law authorizing a tax preference enacted after January 1, 2017

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

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

objective. This act would further provide that all tax preferences enacted after January 1, 2016,

would be repealed on the first day of January next following the fifth anniversary of its effective

date.

     This act would take effect upon passage.

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