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During the last General Assembly, legislators approved a measure that created the Tax Expenditure Review Committee ("Committee") in hopes of providing a method outside of the biennial budget process to review all tax expenditures.
The legislation, House Bill 9 (131st), was sponsored by now former Rep. Terry Boose, and requires the Committee to include three members from both the House and the Senate as well as the tax commissioner, or his designee, who will serve as a non-voting member.
The scope of the Committee will be to look at all tax expenditures, which include tax deductions, tax exemptions and tax credits. According to the Legislative Service Commission, for a provision to qualify as tax expenditures, it must meet the following criteria:
it could reduce revenue to the state's General Revenue Fund
it may be legislatively changed or repealed
the attribute exempted from tax would otherwise be included as part of that tax's defined base
it is not subject to an alternate tax
Currently, there are 128 tax expenditures that meet this definition according to the Ohio Department of Taxation's Tax Expenditure Report.
The Committee must establish a schedule for reviewing every tax expenditure at least once every eight years and must prepare a report with findings and recommendations by July 1st of every even-numbered year (which are non-budget years). The legislation also gave the Committee guidelines as to how to determine the effectiveness of a tax expenditure, including:
the number of people, organizations or businesses benefiting from a tax expenditure
the fiscal impact of the tax expenditure on state and local taxing authorities
what public policy objectives might support a tax expenditure
whether the goal of the tax expenditure could be met by some other manner
the extent to which the tax expenditure creates an unfair competitive advantage
potential negative effects on a population when terminating a tax expenditure
While no date has been set for the first meeting on the Committee, House and Senate leadership has announced the members that will be serving on it. From the Senate, Sens. John Eklund (R-Chardon), Scott Oelslager (R-North Canton) and Vernon Sykes (D-Akron); and from the House, Reps. Tim Schaffer (R-Lancaster), Gary Scherer (R-Circleville) and John Rodgers (D-Mentor-on-the-Lake).
Stayed tuned to this space for updates on the Tax Expenditure Review Committee as their work gets underway. Should you have any questions please do not hesitate to contact one of our professionals.