Lawmaker requests a tally of tax breaks
Whether it's a property tax exemption for Temple Square or an income tax credit for clean-fuel vehicles, Sen. Scott McCoy wants details on how much potential revenue the state is losing with every tax break it offers. To that end, he is drafting a bill that would require the governor to include in his annual budget recommendation a list of tax exemptions and how much those exemptions, if they did not exist, would otherwise bring into state coffers.
"We're in the middle of this tax reform, and a few of us believe we should simply ask the governor to submit a tax expenditure report along with his budget," said McCoy, D-Salt Lake. "We should know each and every year any tax credit, deduction or exemption."
McCoy admits that there may be some tax breaks that no one would want to impose, some that may be difficult to actually put a number to, such as how much state and local governments are losing by not taxing the property of nonprofit entities such as The Church of Jesus Christ of Latter-day Saints.
But even an educated guess could be helpful, he says. "It would provide more accountability and openness in the budget.
Those exemptions could also confuse the debate, something that Sen. Lyle Hillyard, R-Logan, the majority budget manager, fears would happen.
Currently, the fiscal costs of expanding exemptions, creating tax credits or other changes to the tax code are identified when a bill is introduced in the Legislature, and those costs — known as fiscal notes — can often determine the fate of legislation. But other than that, the costs of exemptions are generally not identified, by the governor in his proposed budget, by the Legislature in its approved budget or within specific legislation.
By opening the door to debate on those exemptions every year, legislators would likely face a flood of complaints from groups that would probably never be taxed, such as religious organizations, nonprofit charities and educational institutions. Such a requirement could also overwhelm the legislative and gubernatorial staffs with the work that would be necessary to estimate revenue the state is not actually receiving.
"I honestly think we would cause such a stir that by the time we got finished we wouldn't have learned anything," Hillyard said. "The people that would come out of the woodwork would kill you."
The proposal is not a new one, Hillyard said, and it has failed in the past because there were too many questions and potential costs. Chief among those has been determining the value of property that has never been taxed or even assessed, such as Temple Square or the Cathedral of the Madeleine.
"It would almost be impossible to figure out what they are worth," he said.
E-mail: bbjr@desnews.com; jloftin@desnews.com
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