Senate shifts gears on tax credits
More disclosure approved. New law likely to emerge with budget passage.
The Massachusetts Senate abruptly changed course yesterday on tax credit transparency, paving the way for passage of legislation that would for the first time identify the recipients of particularly lucrative financial incentives offered by the state.
By a 38-0 vote, the Senate approved a budget amendment that would compel state officials to disclose the names of companies receiving refundable or transferable tax credits and how many of the credits they received. Similar language is contained in the House budget, so the prospects for passage of some measure are good this year.
Unlike regular tax credits, which reduce how much tax a company owes, refundable or transferable tax credits can be sold and converted into cash by companies that have no tax liability.
Gov. Deval Patrick and the House have been pushing for more transparency in the awarding of tax credits for two years, but the Senate has repeatedly insisted on shielding the names of some tax credit recipients from public view.
For example, the state currently does not disclose the names of film producers who shoot movies in Massachusetts and receive tax credits equal to 25 percent of whatever they spend. By contrast, life science companies that receive similar tax credits are identified and required to meet specific job growth targets.
Sen. Karen Spilka of Framingham, the cochair of the Legislature’s Economic Development and Emerging Technologies Committee, a year ago told CommonWealth she opposed identifying tax credit recipients because it could have a “chilling effect” and dampen enthusiasm for doing business in Massachusetts.
In an interview with the magazine today, however, she said her chief concern was that earlier proposals to disclose more information about tax credits were retroactive and might affect companies that didn’t know their names would be released when they applied for the awards.
“This isn’t retroactive anymore,” she said of the budget amendment that was just approved. “If they don’t want to have their name disclosed, they won’t apply.”She said she, Senate President Therese Murray and Senate budget chief Steven Panagiotakos were no longer as worried about businesses boycotting Massachusetts if their identities were revealed. “We need to be able to analyze the tax credit information,” she said. “It’s fair for the public to know.”
Legislative officials said it was unclear whether earlier bills were retroactive in nature. One administration official said the governor’s proposal a year ago would not have been retroactive.