After looking at just a couple of state tax credits, a state task force already is hearing from those pushing three new tax credits, the co-chairman of the panel said Wednesday.
“It never ends,” said Rep. David Dank, R-Oklahoma City. “The simple truth is that we could exempt almost everything from taxation.
“And then I suppose we could apply for a historic preservation tax credit to turn this state Capitol building into a casino or something because state government would be broke and out of business.”
An estimated $5 billion annually is diverted from the state's coffers through tax incentives, exemptions and deductions. That's money that taxpayers had to make up in the state budget or were funds that were simply cut from the state's budget, Dank said.
With the state facing revenue shortfalls the past three years, lawmakers are taking a look at several tax credits and incentives.
“Every time we grant a tax credit to Bob, Joe winds up paying the difference,” Dank said.
The three latest tax credit suggestions are for charging electric cars, storm shelters and low-income housing, Dank said. More people need to take personal responsibility, he said.
“If you want a storm shelter, great, but why should you expect your neighbor to subsidize it?” Dank asked. “And if you get an electric car and want a place to plug it in, good for you. Just don't demand that the rest of us pay for the wiring.”
Dank assured task force members and others that he has no intention of seeking to eliminate the state's five-year ad valorem exemption for qualifying manufacturing concerns, one of the incentives reviewed Wednesday, its second meeting. The panel also looked at the merits of a tax credit for energy-efficient home construction.
Under the ad valorem exemption incentive, new manufacturing plants, which include operations that produce electricity, may apply to be exempt from paying property taxes during the first five years of operation; expanding manufacturers may seek the exemption on the expansion.
“We have to (have it) to compete,” Dank said. “It's not something that I'm necessarily happy with, but you have to compete in this environment. If other states are giving it, we have to give it.”
As part of the incentive, the state reimburses schools, counties and other entities for the amount of taxes the manufacturing companies would have paid each year for the first five years. Dank said Oklahoma is the only state that reimburses entities 100 percent.
“Why are we doing that?” he asked. “It makes absolutely no sense to me to give the reimbursement to the local entities.”
Dank said he would support legislation reducing the reimbursement rate or seek a constitutional amendment allowing voters to decide whether to eliminate the reimbursement altogether.