Newspaper article THE JOURNAL RECORD

Oklahoma Lawmaker Examines Effect of Incentive Programs

Newspaper article THE JOURNAL RECORD

Oklahoma Lawmaker Examines Effect of Incentive Programs

Article excerpt

The Oklahoma Legislature has enacted quite a few tax incentive programs over the years, designed to boost the state's economy by attracting and retaining businesses. But are they working? State Rep. John Wright, R-Broken Arrow, brought an interim study of the state's financial incentives programs before the House Revenue and Taxation Committee on Tuesday.

"What has the state been doing, what has been the expense of what the state has been doing, has it been effective, should we look at reconfiguring our incentives to accomplish the state's intended goals?" Wright said after the meeting. "We need to figure out ways to measure the impact to find out if it's sound public policy."

To measure the success of several programs that provide tax breaks for businesses, state leaders first have to have a good idea of what success looks like, according to legislation passed in 2004 that created Oklahoma's Incentive Review Committee. The Incentive Review Committee, chaired by James Wilbanks of the state treasurer's office, has adopted eight principles of sound tax incentives, published in the committee's 2005 report.

First, the programs' benefits should be weighed against the incentives' costs, including indirect costs incurred by enactment of the programs. Second, each specific incentive program should fit within a larger framework of state economic objectives. The state of Oklahoma currently lacks a comprehensive strategic statement of state economic incentive policy, the report notes.

Third, the objectives of the incentive program should be clearly defined. Every incentive needs to target at least one of four stated purposes: expansion of exports, substitution of imports, increased productivity and/or improved resource utilization. Fourth, incentive programs should be targeted to companies where the program will clearly make a difference and to industries with high output, high income and high employment multipliers. …

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