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:
{ADD CHAPTER 48.1 ADD}
{ADD TAX EXPENDITURE REPORTING ADD}
{ADD 44-48.1-1. Tax expenditure reporting. -- ADD} {ADD (a) On or before the second Tuesday in January of each year beginning in 1998, 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 such 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%) such 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%) such that one hundred percent (100%) of the tax expenditures in effect will have been reported.
(b) For the purposes of this section; a "tax expenditure" shall be 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 for the second Tuesday in January of 2002 and each year thereafter, 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 such 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 shall not be limited to:
(1) The legislative history of the expenditure and its legal reference, including information whether the expenditure is required as a result of federal or state constitutional, judicial, or statutory mandate.
(2) Amount of revenues forgone. The tax administrator shall develop an index of the reliability of each estimate using five (5) levels with level one (1) being most reliable. Where actual tax returns are the source of the estimate, the estimate should be assigned reliability level one (1). 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) Cost/benefit analysis of the tax expenditure, including the direct revenue loss from the tax expenditure as well as the economic and tax revenue gains occurring through the economic activity resulting from the tax expenditure.
(4) To the extent allowable by law, identification of the beneficiaries of the exemption.
(5) A comparison of the tax expenditure to the tax systems of the other New England states, with emphasis on Massachusetts and Connecticut.
(6) Determination of the beneficiary's state tax burden.
(7) 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 the section above. 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. ADD}
SECTION 2. This act shall take effect upon passage.
