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Bill Would Require Annual List of Tax Exemptions

Bill Would Require Annual List of Tax Exemptions



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SALT LAKE CITY (AP) -- Sen. Scott McCoy is proposing legislation that would require the governor to include in his annual budget recommendation a list of tax exemptions and how much those exemptions reduce state revenue.

"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 said there may be some exemptions that are difficult to put a number to, such as how much state and local governments are losing by not taxing the property of nonprofit entities, but even an educated guess could be helpful.

"It would provide more accountability and openness in the budget," he said.

"This seems very timely to me. We're talking about overhauling the entire state tax system, and we won't finish with that this session. We'll be doing that for some years," he said. Having the tax-exemption data "would inform the debate."

However, Sen. Lyle Hillyard, R-Logan, the majority budget manager, fears that could confuse the debate.

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."

Hillyard said that such proposals have 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.

(Copyright 2005 by The Associated Press. All Rights Reserved.)

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