State lawmakers proposed bills this week that add new oversight to Colorado’s system of tax expenditures.
The Tax Expenditure Evaluation Interim Study Committee voted in favor of requiring legislators to define the benefits of any tax expenditure they wish to introduce or continue through their bills. Tax expenditures are policy changes that derive from spending through the tax code.
“Today, we advanced proposals to modify certain tax expenditures and improve how our state evaluates and enacts tax expenditures to ensure these policies achieve their intended outcomes,” said the legislative committee's chair, Rep. Adrienne Benavidez, D-Commerce City, after Wednesday's meeting.
The types of need legislators will have to identify include the creation or retention of jobs, reduction of inefficiencies, provision of tax relief or prompting a change in behavior.
Bills would also need a statement of the tax expenditure’s purpose and a repeal date.
The committee also supported the establishment of a legislative oversight committee to discuss the tax policy recommendations of the state auditor. An associated task force would recommend changes to state and local taxation policy to the committee.
The committee also approved tweaks to the sales tax exemption for energy products and for net operating loss deductions. It further decided to repeal the long-term lodging exemption, which does not currently tax stays of longer than 30 days at hotels, motels, and trailer parks. The people taking advantage of these living arrangements include those in financial hardships or relocated due to natural disaster. The state would have recovered $12.3 million in 2017 without the exemption.