Chapter 142

2003 -- S 1127 AS AMENDED

Enacted 07/10/03

AN ACT

RELATING TO TAXATION

Introduced By: Senator Stephen D. Alves

Date Introduced: June 10, 2003

It is enacted by the General Assembly as follows:

     SECTION 1. Section 44-48.1-1 of the General Laws in Chapter 44-48.1 entitled "Tax

Expenditure Reporting" is hereby amended to read as follows:

44-48.1-1. Tax expenditure reporting. -- (a) On or before the second Tuesday in

January of each year beginning in 1998 each even numbered year beginning in 2004, the state tax

administrator, to the extent possible within the appropriations provided for the purpose, shall

deliver a tax expenditure report to the general assembly. The report for 1998 will provide the

minimum information for twenty-five percent (25%) of existing tax expenditures. The report for

1999 will provide the required information for an additional twenty-five percent (25%) of the tax

expenditures so that fifty percent (50%) of the tax expenditures will have been presented. The

report for 2,000 will provide the information for an additional twenty-five percent (25%) so that

seventy-five percent (75%) of the tax expenditures in effect will have been presented. The report

for 2001 will provide the information for an additional twenty-five percent (25%) so that one

hundred percent (100%) of the tax expenditures in effect will have been reported. Each report will

provide the minimum information for one hundred percent (100%) of tax expenditures in effect

on January 1 of the calendar year preceding the report's publication.

      (b) For the purposes of this section; a "tax expenditure" is any tax credit, deduction,

exemption, exclusion, credit preferential tax rate, tax abatement, and tax deferral that provides

preferential treatment to selected taxpayers, whether directly through Rhode Island general laws

or Constitutional provisions or indirectly through adoption of other tax codes.

      (c) On or before the second Tuesday in January of 2002 and each year after this, the tax

administrator shall deliver a tax expenditure report to the general assembly providing the

minimum information for twenty-five percent (25%) of existing tax expenditures so that the

information provided on any expenditure will have been reported no more than four (4) years

prior.

      The information included for each tax expenditure shall include, but not be limited to:

      (1) The legislative history of the expenditure and its legal reference The legal reference

of the expenditures, including information whether the expenditure is required as a result of

federal or state constitutional, judicial, or statutory mandate.

      (2) Amount of revenues forgone. or an estimate, if the actual amount cannot be

determined, for the calendar year immediately preceding the publication of the report. The report

shall also include an estimate of revenue forgone for the calendar year in which the report is

published and the year following the report's publication. The tax administrator shall develop an

index of the reliability of each estimate using five (5) levels with level one being most reliable.

Where actual tax returns are the source of the estimate, the estimate should be assigned reliability

level one. Where no reliable data exists for the estimate, the estimate should be assigned

reliability level five (5). The reliability level shall be reported for the estimate of the revenues

forgone.

     (3) To the extent allowable by law, identification of the beneficiaries of the exemption

by number, income, class and industry.

     (4) A comparison of the tax expenditure to the tax systems of the other New England

states, with emphasis on Massachusetts and Connecticut.

     (5) Determination of the beneficiary's state tax burden. The data source(s) and analysis

methodology.

     (6) To the extent allowable by law, identification of similar taxpayers or industries that

do not enjoy the exemption.

      (d) On or before the second Tuesday in January of 1997, the tax administrator shall

prepare and submit an inventory of tax expenditures with the schedule for estimating them as

prescribed in this section. The schedule should include an initial estimate of reliability for each

item on the schedule and may include any other information, including costs associated with

completing the schedules, that the tax administrator deems appropriate. Each report shall include

a section containing recommendations for improving the effectiveness of the report as a tax

policy tool. This section shall identify the resources required to implement these

recommendations and shall also contain an estimate of the costs associated with such

recommendations.

(e) On or before the second Tuesday in January 2004, the state tax administrator shall

make available to the general assembly a plan to improve Rhode Island's tax expenditure

reporting effort. The plan shall include measurable criteria to evaluate improvements in the

reliability of tax expenditure item estimates and the identification of beneficiaries of each tax

expenditure by number, income, class and industry. The plan shall also include cost estimates of

additional resources necessary to implement the plan, and may include any other information that

the tax administrator deems appropriate for inclusion in said plan.

SECTION 2. This act shall take effect upon passage.     

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LC03400

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