Bill Seeks Review of Tax Breaks

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A state representative has filed a bill calling for state and local tax incentives to be regularly evaluated by a legislative commission. Eric Koch (R-65) says there is currently no way of knowing if tax breaks are creating anticipated job and investment benefits. The plan outlines a five-year comprehensive process that includes information to help lawmakers decide if incentives should be continued, modified or even repealed. December 29, 2013

News Release

STATEHOUSE - State and local tax incentives would be subject to regular review and evaluation under a bill filed by State Representative Eric Koch (R-Bedford). The bill would require the Commission on State Tax and Financing Policy (CSTFP) to review, analyze and evaluate state and local tax incentives that are provided to encourage economic development or to alter, reward or subsidize a particular action or behavior by a tax incentive recipient.

The bill requires the CSTFP to complete a comprehensive review of all state and local tax incentives over a five-year period beginning in the 2014 interim and requires the Legislative Services Agency (LSA) to conduct the evaluation and analysis of each incentive scheduled for review by the CSTFP.

The five-year incentive review would cover exemptions, deductions, credits, preferential rates and other tax benefits that: (1) reduce the amount of a tax that would otherwise be due the state; (2) result in a tax refund in excess of any tax due; or (3) reduce the amount of property taxes that would otherwise be due to a political subdivision of the state. The review would include programs under which political subdivisions dedicate revenue to provide improvements or to retire bonds issued to pay for improvements in an economic or sports development area, a community revitalization area, an enterprise zone or a tax increment financing district.

"Right now, after tax breaks are given, we have no way of knowing whether or not they are actually resulting in the benefits expected, such as new investment and job creation," said Rep. Koch. "This bill will ensure that state and local policymakers have the information necessary to decide whether to continue, modify or repeal economic development incentives based upon real data and independent analysis. We owe it to all taxpayers to ensure that Indiana's state and local tax incentives are actually achieving the intended results."

Rep. Koch serves all or parts of Brown, Lawrence, Monroe, Jackson and Johnson counties.

Source: The Indiana House Republican Caucus