Relating to a periodic review and expiration dates of state and local tax preferences.
The implementation of HB3298 will require all new tax preferences to stipulate an expiration date within six years of being enacted. This provision mandates that preferences that were enacted without an expiration clause will also expire automatically after six years. The bill requires the commission to systematically evaluate these preferences to determine whether they achieve their intended goals and whether they can be replaced with more efficient alternatives. This could lead to a significant tightening of fiscal policy as the state assesses its tax relief measures more rigorously.
House Bill 3298 establishes a new framework for the periodic review and expiration of state and local tax preferences in Texas. The bill introduces Chapter 320A to the Government Code, detailing how tax preferences, which include various forms of tax relief such as exemptions and credits, will be assessed for their effectiveness and necessity. Central to this new framework is the formation of a select commission tasked with overseeing these reviews, ensuring there is accountability regarding the fiscal impacts of tax preferences on Texas' economy.
While proponents of the bill argue that it will enhance transparency and ensure that tax breaks are effectively supporting state economic objectives, opponents express concern that frequent evaluations may politicize tax preferences and undermine long-standing incentives that benefit certain industries. The creation of a commission composed of members from both legislative chambers and the comptroller position aims to provide a balanced approach; however, there may be debates about the commission's potential influence and the criteria used for evaluating tax preferences.
The bill mandates biennial reporting by the commission on its reviews and fosters public participation by allowing input on the review process. The proposed changes reflect a significant shift towards a more systematic approach to tax incentives, seeking to uphold fiscal responsibility while balancing the needs of communities and businesses that benefit from these tax provisions.