Taxation: tax expenditures: California Tax Expenditure Review Board.
The legislation will influence state financial oversight by requiring a systematic evaluation of existing tax expenditures. By requesting a thorough, peer-reviewed assessment from the University of California, the bill intends to scrutinize how these tax benefits serve the public interest and whether they justify the corresponding revenue losses. Such assessments aim to foster transparency in governmental operations concerning tax policy, ensuring better allocation of resources and increasing accountability regarding how public funds are utilized. This could ultimately lead to modifications or repeals of ineffective tax expenditures that do not yield tangible benefits to the state or its citizens.
Senate Bill No. 956, introduced by Senator Jackson, aims to establish the California Tax Expenditure Review Board as an independent advisory body to assess major tax expenditures within California's tax laws. This board will play an important role in the evaluation and recommendation process related to tax exemptions, deductions, exclusions, and credits that traditionally reduce revenue for the General Fund. The bill mandates that this board be composed of five key members, including representatives from various financial oversight bodies, tasked with providing comprehensive assessments and recommendations regarding significant tax expenditures identified over the previous ten fiscal years.
Notably, the bill reflects a rising consciousness regarding fiscal responsibility and effective governance amid concerns of rising deficits and reduced public service funding. Critics may assert that the scrutiny of tax expenditures could threaten incentives designed to stimulate economic growth or specific sectors within California. Proponents argue that an evidence-based approach to tax expenditures will lead to more efficient tax policies that can sustain and enhance public services, rather than perpetuating ineffective or obsolete benefits that drain financial resources. By mandating public hearings and requiring verification of tax expenditures, the bill also emphasizes democratic engagement and public accountability.