Virginia hands out a number of tax credits and exemptions each year. Depending upon the estimate, the total of these credits and exemptions totals several billion dollars a year. And, in this era of tight budgets, a few legislators are looking into ways to rationalize the system:
Del. Ben Cline, R-Rockbridge County, one of the most conservative members of the House of Delegates, and Del. David Englin, D-Alexandria, one of the most liberal, joined to promote their nearly identical bills to “sunset” all future tax credits enacted by the General Assembly.
That means any new credits would include an expiration date no longer than five years from when they take effect. To renew them, the legislature would have to act again.
This makes perfect sense, especially when we take another look at the dollar amounts in question:
The lawmakers were spurred to action by a report two months ago from the Joint Legislative Audit and Review Commission, or JLARC, a legislative watchdog agency that took a preliminary look at state tax preferences – exemptions, subtractions, deductions and credits – and turned up some eye-opening numbers.
The investigators found nearly 200 tax preferences that collectively reduced taxpayers’ liability by $12.5 billion in 2008 – almost as much as the $14.3 billion the state collected from the taxes studied.
Some of the tax breaks appear to effectively achieve their stated goals – often, to spur private investment or job creation – but the state has no consistent process for evaluating them, the investigators found.
Cline’s bill, HB 246, also “Requires the State Tax Commissioner to report annually the estimated revenue loss of each state tax credit that is scheduled to expire in the next two calendar years.”
The constituencies for these tax breaks won’t be pleased, and they can be expected to put up quite a fight against any attempt at a sunset.
Which made it all the more interesting to see that Del. Cline also has his own proposed exemption in the mix this year…for computer equipment purchased during the back to school tax holiday. And Del. Englin has a new proposed credit of his own…for businesses that hire ex-cons.
