HF 1216

as introduced - 87th Legislature (2011 - 2012) Posted on 03/21/2011 09:33am

A bill for an act
relating to taxes; providing and applying definitions of "tax expenditure" and "tax
relief"; amending Minnesota Statutes 2010, section 270C.11.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2010, section 270C.11, is amended to read:

270C.11 TAX new text begin RELIEF AND new text end EXPENDITURE deleted text begin BUDGET deleted text end new text begin REPORT new text end .

Subdivision 1.

Statement of purpose.

deleted text begin State governmental policy objectives
are sought to be achieved both by direct expenditure of governmental funds and by
the granting of deleted text end Special and selective tax relief deleted text begin or deleted text end new text begin and new text end tax expenditures deleted text begin . Both Direct
expenditures of governmental funds and tax expenditures have an effect on the ability of
the state and local governments to lower tax rates or to increase expenditures. As a result,
tax expenditures deleted text end should receive a regular and comprehensive review by the legislature as
to (1) their total deleted text begin cost deleted text end new text begin amount new text end , (2) their effectiveness in achieving their objectives, (3) their
effect on the fairness and equity of the distribution of the tax burden, and (4) the public
and private new text begin sector new text end cost of administering new text begin tax relief and new text end tax deleted text begin expenditure financed programs deleted text end new text begin
expenditures new text end . This section is intended to facilitate a regular review of deleted text begin the deleted text end state and local
new text begin tax relief and new text end tax deleted text begin expenditure budget deleted text end new text begin expenditures new text end by the legislature by providing for the
preparation of a regular biennial new text begin tax relief and new text end tax expenditure deleted text begin budget deleted text end new text begin report new text end .

Subd. 2.

Preparation; submission.

The commissioner shall prepare a new text begin tax relief
and new text end tax expenditure deleted text begin budget deleted text end new text begin report new text end for the state. The new text begin tax relief and new text end tax expenditure deleted text begin budget deleted text end
report shall be submitted to the legislature by February 1 of each even-numbered year.

Subd. 3.

Period covered.

The report shall include estimates of annual new text begin tax relief
and new text end tax expenditures for, at a minimum, a three-year period including the two-year
period covered in the governor's budget submitted in the preceding January pursuant
to section 16A.11.

Subd. 4.

Contents.

The report shall detail for each new text begin tax relief and new text end tax expenditure
item the amount of tax revenue forgone, a citation of the statutory or other legal authority
for the new text begin relief or new text end expenditure, and the year in which it was enacted or the tax year in
which it became effective. The report may contain additional information which the
commissioner considers relevant to the legislature's consideration and review of individual new text begin
tax relief and new text end tax expenditure items. This may include, but is not limited to, statements
of the intended purpose of the new text begin tax relief or new text end tax expenditure, analysis of whether the
expenditure is achieving that objective, and the effect of the new text begin relief or new text end expenditure device
on the distribution of the tax burden and administration of the tax system.

Subd. 5.

Revenue estimates; legislative bills.

Upon reasonable notice from the
chair of the house of representatives or senate tax committee that a bill is scheduled for
hearing, the commissioner shall prepare an estimate of the effect on the state's tax revenues
which would result from the passage of a legislative bill establishing, extending, or
restricting a new text begin tax relief or a new text end tax expenditure new text begin item new text end . These revenue estimates shall contain the
same information as provided in subdivision 4 for new text begin relief and new text end expenditure items contained
in the new text begin tax relief and new text end tax expenditure deleted text begin budget deleted text end new text begin report new text end , as appropriate.

Subd. 6.

Definitions.

For purposes of this section, the following terms have the
meanings given:

(1) "tax deleted text begin expenditure deleted text end new text begin relief new text end " means a new text begin nonrefundable new text end tax provision which provides a
gross income definition, deduction, exemption, credit, or rate for certain persons, types of
income, transactions, or property that results in reduced tax revenue; deleted text begin and
deleted text end

new text begin (2) "tax expenditure" means a refundable tax provision which provides a gross
income definition, deduction, exemption, credit, or rate for certain persons, types of
income, transactions, or property that results in a refund in excess of tax liability to the
claimant; and
new text end

deleted text begin (2) deleted text end new text begin (3) new text end "tax" means any tax of statewide application or any tax authorized by state
law to be levied by local governments generally. It does not include a special local tax
levied pursuant to special law or to a special local tax levied pursuant to general authority
that is no longer applicable to local governments generally.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end