Newspaper article THE JOURNAL RECORD

Tax Preferences Shield $787.7 Million from State / Each Years, Says Study

Newspaper article THE JOURNAL RECORD

Tax Preferences Shield $787.7 Million from State / Each Years, Says Study

Article excerpt

At least $787.7 million that might otherwise be collected annually in Oklahoma taxes is foregone through tax preferences, according to a state study issued Thursday.

Tax preferences - sometimes described as tax expenditures, tax incentives or subsidies - are not new to the state, but a review of their impact is, according to Alexander Holmes, director of the Oklahoma Office of State Finance. He recommends such a report be conducted every two years, and be expanded "to encompass all taxes and fees levied by the state of Oklahoma," the study says.

Most of the $787.7 million in tax preferences is in four areas. These are $617.6 million in sales tax preferences, $83.9 million in ad valorem tax preferences, $55.5 million in motor fuel tax and $15.87 million in individual income taxes, according to the report.

A study of specific preferences and their appropriateness also is in order, according to Holmes.

The report does not address that issue, but it does point to "special interest legislation of questionable economic benefit to the state," which was enacted in the latest legislative session.

"Tax preferences are typically enacted to advance commonly held social goals," the report states, "including providing incentives to promote economic development of the state. However, they can be enacted as a form of special interest legislation, which is usually far less visible than a subsidy by direct appropriation.

"In the past session (1st session of the 41st Oklahoma Legislature) there were eight bills passed which enacted one or more tax preferences each for a total of 12 tax preferences. Of these tax preferences, two appear to be special interest legislation of questionable economic benefit to the state," the report charges. It does not single out the two examples.

Examples of preferential tax treatment include exemptions for businesses which the state determines to be especially deserving and vulnerable to competitive forces, the report states, as well as the elderly, charities and schools. …

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