Bills to create or expand tax breaks in Washington would be required to define the nature of the expected benefits and include an expiration date, under legislation passed today by the Senate.
“When the Legislature passes a tax break without defining its benefits, it makes it difficult to determine whether the tax break actually provides the benefit,” said Sen. Craig Pridemore, D-Vancouver. “This measure will clear up the mystery.”
Pridemore said his Senate Bill 6088 will also make it easier in the future to determine whether a tax break has failed to accomplish its intended purpose or whether its purpose has vanished over time. The bill also would attach a five-year sunset clause, or expiration date, on any new tax breaks unless a different expiration date is specifically assigned.
“Despite everyone’s best intentions, there are times when the Legislature creates a tax break that looks great on paper but for one reason or another fails to deliver,” he said. "At other times, the Legislature creates tax breaks that work for a time — even, perhaps, for a very long time — but eventually become obsolete due to changes in markets and the economy.”
When that happens, the defined benefit will enable entities like the Joint Legislative Audit Review Committee and the Citizen Commission for Performance Measure of Tax Preferences to more effectively evaluate a tax break and advise the Legislature when the exemption comes up for review, Pridemore said.
In both those cases, documenting the rationale behind the tax break will enable the review committee and the citizen commission to assess the public benefits of the tax break and advise the Legislature as to whether a particular tax break has true value or is squandering valuable tax dollars.
“This approach would make sense at any time, since we should never waste money and government resources unnecessarily,” Pridemore said. “But in today’s difficult economic climate, it makes even more sense.”
SB 6088 passed on a 45-3 vote and now goes to the House of Representatives.