Brewer Votes To Approve Final Report for Tax Expenditure Commission
(Boston) – Senator Stephen M. Brewer (D-Barre), a member of Commonwealth’s Tax Expenditure Commission, voted today to approve the commission’s final report. The Commission, which was established through a legislative initiative included in the Fiscal Year 2012 budget and approved by Governor Patrick, was tasked with making recommendations to the Legislature and Governor on the administrative efficiency and cost benefit of tax expenditures.
“This commission has done a thorough job looking carefully at the tax expenditures in the Commonwealth,” said Brewer. “Today's fiscal climate is evolving and some of these expenditures had not been reviewed in many years. These expenditures are attached to our citizens and will affect businesses and individuals and we did not take that lightly. The recommendations that have resulted will lead to increased transparency, more detailed oversight and more rigid outlines for establishing new expenditures.”
The current total amount of tax expenditures in Massachusetts is just over $24 billion. Some of the largest expenditures come from exemptions for personal or professional services, real estate transfers, property rentals, food, clothing and the sale of utilities. Other types of tax expenditures include tax deductions or credits designed to incentivize particular economic or social activities such as encouraging capital investment in machinery for manufacturing, the investment in scientific research, or energy conservation.
The commission met publicly nine times from October 2011 until April 2012 reviewing reams of data and analysis assembled by the Department of Revenue and other sources. For the first time, the Commission carefully studied exemptions, deductions and credits in the Massachusetts tax code and recommended methods for measuring and reviewing their effectiveness.
“The work we accomplished on this commission will provide a template for future tax expenditures in the Commonwealth,” Brewer continued. “The set of principles we have established here will not only benefit Massachusetts but can be used as a road map for other states. Knowing full well that future circumstances will dictate the legislative flexibly, we will work to ensure that this will not be a political process and that the Legislature and the Governor will work together to identify and publish, for each tax expenditure, a clearly articulated public policy purpose and desired outcome.”
The commission studied the history of current expenditures including the original motives behind granting them, metrics for measuring their success, the need for additional reporting and the need for sunset or clawback provisions.
The report recommends that the state’s Office of Commonwealth Performance, Accountability, and Transparency (CPAT) work with the Department of Revenue to identify metrics for assessing tax expenditures’ effectiveness at achieving these purposes and outcomes and collect the necessary data. It also recommends CPAT report annually to the Governor and Legislature on the effectiveness of all tax expenditures, including meeting job creation goals.
Furthermore, the report calls on the Legislature and the Governor to work together to reduce the number of existing tax expenditures and the total amount of forgone revenue from the Tax Expenditure Budget. Additionally, the report recommends periodic reviews of all tax expenditures.
Massachusetts has remained committed to transparency on spending. The state is one of 42 states with tax expenditure budgets. The expenditures are available online at mass.gov and have been printed in the budget since the start of the Patrick-Murray Administration.
The commission is comprised of the Secretary of Administration and Finance, State Auditor, State Treasurer, House and Senate Minority Leaders, House and Senate Ways and Means Chairs, House and Senate Revenue Chairs and two members of the Governor’s Council of Economic Advisors.
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Posted: Mon, Apr 23, 2012
Updated Mon, Apr 23, 2012