Tax Break Transparency Bill Passes House
Earlier today, Senate Bill 5843, a measure that would place strict transparency and accountability requirements on all future tax breaks passed out of the House on a bipartisan vote. The House adopted a series of changes to the measure, which will have to be approved by the Senate before it can be sent to Governor Inslee and signed into law.
The adopted changes to SB 5843 significantly strengthen the legislation. Specifically, the revamped bill:
- Incorporates a 10 year sunset date for all new tax breaks: SB 5843 mandates that all newly enacted tax breaks – along with tax breaks already on the books that are being renewed or expanded – sunset 10 years after taking effect. Incorporating expiration dates allows policymakers and state auditors to review these loopholes and weigh their value against other important public priorities.
- Strengthens reporting requirements: The adopted changes to SB 5843 would require individuals and businesses that utilize tax loopholes to publicly disclose the total value received in state tax breaks with the Department of Revenue (DOR). In cases where releasing such information may be detrimental to the economic health of a business or individual, DOR may grant a waiver from public disclosure.
- And, requires a comprehensive statement of legislative intent: All new tax breaks must fit into one of four categories; 1) encouraging industry competitiveness; 2) creating or retaining jobs; 3) reducing market inefficiencies, or 4) encouraging specific economic behavior. SB 5843 also mandates that newly enacted tax breaks include a comprehensive statement of legislative intent and key metrics and data requirements for evaluative purposes.
SB 5843 is a strong first step towards increased transparency in our revenue system. While much more can and should be done moving forward, the Senate should approve these changes and begin to ensure that our tax code is held to the same level of scrutiny as our state budget.