PROVIDENCE – The 2018 Tax Expenditures Report said that the state missed out on $2.26 billion in tax year 2014 for 238 tax expenditure items, and passed up on $2.15 billion for 231 items in 2015, the Department of Revenue reported Wednesday.
Tax expenditures are legal mandates that provide preferential tax treatment to taxpayers that meet the requirements of the mandates. The report looks at 238 tax expenditures that were enacted as of January 2017 in order to track and assess their effect on the state over time.
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“Oftentimes, the estimated cost of a tax expenditure item is made only once – at the time it is passed into law,” said Paul L. Dion, chief of the Office of Revenue Analysis in a statement. “The Tax Expenditures Report provides for an accounting of the cost of tax expenditure items on an ongoing basis. Absent a Tax Expenditures Report, it would be difficult to assess the cost of a tax expenditure compared with an appropriated expenditure.”
The largest component for both years was in tax exemptions, which totaled $1.37 billion of revenue forgone for 103 items in 2014 and $1.41 billion for 102 items in 2015. The largest portion of the exemptions was for purchases used for manufacturing purposes, accounting for $382.9 million and $394.8 million in 2014 and 2015 respectively.
Tax credits accounted for forgone revenue of $212.7 million in 2014 and $225.9 million in 2015. Included among the credits were those for:
- Business corporation credits, $32.4 million in 2014, $7.2 million in 2015, with $19.4 million of the total in 2014 going toward investments and $2.3 million in 2015 related to investments; research and development accounted for $8.2 million and $2.3 million of the totals, respectively, for 2014 and 2015
- Business corporation taxes forgone, $109.2 million in 2014 and $153.8 million in 2015
- Historic structures credits, $9.3 million in 2014 and $13.2 million in 2015
Other notes:
While not included in the tax year 2014/2015 results as the program was not in place yet, the report estimated that Rebuild Rhode Island tax credits will account for $381,925 in tax year 2017 and $10.2 million in tax year 2018. The credit had not been enacted yet in tax years 2014 and 2015.
The tax expenditures report is a biennial project.
Chris Bergenheim is the PBN web editor.
