Business Leaders Disclose Concerns to Comptroller Lembo
State Comptroller Kevin Lembo met with several members of CBIA’s Tax Committee this week to discuss businesses’ concerns with his proposal to publicly disclose company-specific information about the use of state tax credits.
Under the comptroller’s bill (HB 6566) the state will publish a company-specific, searchable database of businesses using state-provided tax deductions, credits, or exemptions, along with the actual amount of tax savings and advantages realized by each company.
Comptroller Lembo [in picture above, center] said that the bill is designed to make sure that Connecticut gets the best return on investment for its tax dollars.
But business leaders said the bill goes too far. Publicizing company-specific information, they said, will weaken Connecticut’s economic efforts by stirring misconceptions of how the tax credits work, revealing sensitive data that their competitors can use against them, and potentially be used for adverse political reasons.
They said a “snapshot” of information on a website can’t tell the full story of how tax credits are nurturing some of the state’s highest-growth industries–and creating a powerful ripple effect of jobs and investments in other types of businesses.
Business tax credits are vehicles specifically created by the state legislature to encourage the growth of certain industries here and provide the state with an expansion of economic activity over a long period of time.
Credits can only be earned by companies that invest in Connecticut jobs or facilities. They also can’t be claimed until after the businesses make the designated investments—which often takes many years, sometimes decades.
Most important, credits have accomplished exactly what the legislature wanted them to do: anchor healthy businesses and industries in Connecticut.
Tax committee members also discussed differences between direct grants to companies through the state’s economic development programs and tax credits. With credits, a company is putting its own assets at risk by making an investment, as opposed to receiving a check from the state for moving or staying here. As a result, the state should be more sensitive to the proprietary nature of those investments and not publicly disclose company-specific information.
Currently, both the departments of Economic and Community Development and Revenue Services publish combined data about the use of business tax credits, and DRS regularly audits them. Not incidentally, DRS Commissioner Kevin Sullivan and DECD Commissioner Catherine Smith are both opposing HB 6566.
Open to Discussion
During the hour-long discussion, the comptroller said he was open to finding a way to obtain a greater depth of information about the credits without divulging company-specific information.
However, he said that perhaps not everything is working with the tax credits and he wants to provide state policymakers with closer scrutiny of them.
Tax committee members said they also were open to providing more data, but on a macro level of disclosure that does not jeopardize their companies’ use of the credits. They agreed to explore some solutions and report back to the comptroller.
HB 6566 is in the Finance Committee, which has a deadline of April 24 to approve committee bills. For more information, contact CBIA’s Bonnie Stewart at 860.244.1925 or firstname.lastname@example.org.
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