Tony Mastin, administrator of the Oklahoma Tax Commission, told lawmakers last week that existing income tax credits designed to spur investments cost the state more than $100 million a year in lost revenue.
Mastin told the House Administrative Rules and Agency Oversight Committee that the entire complex of state tax credits, special income tax exemptions and deductions, and legislatively mandated sales tax exemptions result in the loss of billions of dollars in state revenue every year.
House Democrats said tax credits and incentives cost the state some $5.6 billion a year.
A business tax credit for large investments in rural small-business ventures will cost the state $37.4 million in fiscal 2011, which begins July 1, Mastin said. Gov. Brad Henry has asked the Legislature to terminate the program.
Henry has also called for a one-year moratorium on selected tax credits for the 2011 tax year, which Mastin said would bring in a combined $45 million next year.
Rep. Scott Inman, D-Del City, who has been designated as the Democratic leader in the House in the 2011 session, called on the committee to review tax credits designed to encourage oil drilling in the state. He suggested a temporary moratorium or reduction in the credits, but said he was not trying to permanently eliminate incentives for companies drilling oil and gas wells in Oklahoma.
“Tax incentives and other programs intended to encourage oil companies to drill in Oklahoma are just not appropriate at a time when Oklahomans are being asked to pay $2.65 a gallon for gasoline and oil industry profits are setting records,” Inman said.
“We are requiring every department and agency of state government to accept cuts of up to 10% and possibly more,” he said. “It’s just a matter of fairness to ask other beneficiaries of state programs to also accept cutbacks.”