Virginia lawmakers are evaluating whether all of the state tax preferences enacted over the years are being effectively used—as well as their potential impact on revenues. The Joint Legislative Audit and Review Commission has identified 187 credits, deductions, sales tax exemptions, and other tax breaks … but the watchdog agency says only some work the way they were intended.
Many tax preferences, such as sales-tax relief for food, were enacted to achieve policy goals of providing financial assistance or promoting desirable activities. In 2008, they reduced taxpayer liability by $2.9 billion. But JLARC Project Leader Ellen Miller said some to provide tax breaks for people with lower incomes also helped others:
“Only two preferences, the age deduction and low income tax credit, did so efficiently and provided the majority share of the reduced liability to intended beneficiaries,” said Miller.
Miller said the land conservation and historic rehabilitation credits did promote those activities. Tax breaks to help save for college were only somewhat effective. “In contrast, we found that preferences promoting the coal industry, nonprofit activity, and long-term care insurance were unlikely to achieve their goal.”
The worker retraining credit was too small to promote retraining. The report recommends creating an oversight panel to assess all preferences. Some advocates are calling for repeal of tax “loopholes”—to fund services with the revenue that’s saved.
–Anne Marie Morgan
Virginia Public Radio 