HOUSE DOCKET, NO. 5007        FILED ON: 7/26/2018

HOUSE  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  No. 4820

The Commonwealth of Massachusetts

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In the One Hundred and Ninetieth General Court
(2017-2018)

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An Act relative to the examination of tax expenditures by the department of revenue.

Whereas, The deferred operation of this act would tend to defeat its purpose, which is to establish forthwith the examination of tax expenditures by the department of revenue, therefore it is hereby declared to be an emergency law, necessary for the immediate preservation of the public convenience.
 

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:
 

SECTION 1. Chapter 14 of the General Laws is hereby amended by adding the following section:-

Section 14.  (a)  The department of revenue, hereinafter referred to as the department, shall examine, evaluate and report on the administration, effectiveness and fiscal impact of tax expenditures as defined in section 1 of chapter 29 and as presented with the governor’s proposed budget under paragraph 3 of section 5B of said chapter 29. The report shall consider the public policy objectives behind the grant of any tax expenditure and the metrics of measuring success in meeting those objectives.

(b)  The department shall use best practices and standardized criteria to evaluate: (i) the purpose, intent and goal of each tax expenditure and whether the expenditure is an effective means of accomplishing those ends; (ii) the fiscal impact of each tax expenditure on state and local taxing authorities, including past fiscal impacts and expected future fiscal impacts; (iii) the economic impact of each tax expenditure including, but not limited to, revenue loss compared to economic gain and jobs created, retained or lost as a result of the tax expenditure; (iv) the return on the investment made by the tax expenditure and the extent to which the tax expenditure is a cost effective use of resources; and (v) similar tax expenditures, if any, offered by other states and the impact of the tax expenditure on regional and national economic competitiveness.

(c)  The department shall establish a schedule to review tax expenditures so that each tax expenditure shall be reviewed at least once every 5 years. The review schedule may group tax expenditures by those benefitting from the tax expenditures, the objectives of the tax expenditures or the policy rationale for the tax expenditures. The department’s review of each tax expenditure shall include the date the tax expenditure was enacted and the statutory or legal citation.

(d)  Annually, not later than March 1, the department shall file a report of its findings and its recommendations to the clerks of the house of representatives and senate, the chairs of the house and senate committees on ways and means and the chairs of the joint committee on revenue. The report shall include all information required to be reviewed by this section and recommendations. The report shall be made available electronically and prominently displayed on the official website of the department.

SECTION 2. This act shall take effect as of July 1, 2018.