2012 -- H 7723

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LC01635

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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, Savage, Ehrhardt, and Walsh

     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) 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 review.- The house finance committee shall review, over a

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period of time deemed appropriate by the committee but no later than five (5) years after the

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effective date of this chapter, the effectiveness and efficiency of all tax preference programs,

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including, without limitation, tax credits, as such programs are detailed and published by the

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department of revenue. The committee’s review shall include, without limitation, the following:

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(1) The specific goals, purposes and objectives that the tax preferences will achieve; (2) The

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detailed performance indicators to measure whether the tax preferences meet their respective

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goals, purposes and objectives; and (3) Applicable data to determine whether the tax preferences

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are meeting, failing to meet or exceeding their specific goals, purposes and objectives. The

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committee may request and shall receive from any instrumentality of the state, any other

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governmental advisory body or commission or others, such information and assistance as it

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deems necessary for its review and may, in its discretion, hear the proper person representing any

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department or agency with respect to any tax preference relating to its review; provided, that

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nothing contained in this section shall be construed to limit the right of the committee to hold

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public hearings, or to summon any person for examination for the purpose of obtaining

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information necessary for a full and proper consideration of the foregoing.

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     The committee may make recommendations to the general assembly, state agencies,

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private industry or any other entity, and shall report to the general assembly on its findings and

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recommendations at times it determines appropriate.

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     SECTION 2. This act shall take effect upon passage.

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LC01635

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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 the house finance committee to review the effectiveness and

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efficiency of all tax preference programs, including, without limitation, tax credits.

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     This act would take effect upon passage.

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LC01635

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