SD3 - Review of the Effectiveness of Virginia’s Tax Preferences

    Executive Summary:
    Senate Joint Resolution 21 of the 2010 Session (see attached) directed the Joint Legislative Audit and Review Commission (JLARC) to examine the effectiveness of Virginia’s individual income, corporate income, and retail sales and use tax preferences. To date, JLARC staff have conducted a preliminary review of the research literature and have met with personnel from the Department of Taxation. Once all preliminary research activities have been completed, JLARC staff will develop a comprehensive workplan, which will lay out key issues and the methods best suited to fully research them.

    As part of its research, JLARC staff will

    • Determine which individual income, corporate income, and retail sales and use tax preferences are being claimed and to what extent,

    • Estimate the fiscal impact of all such tax preferences claimed,

    • Examine the public policies for which the tax preferences were established and whether the desired public policies have been achieved,

    • Report on whether other states routinely provide a sunset date for their tax preferences, and

    • Propose mechanisms or processes for the ongoing evaluation of the effectiveness of tax preferences.

    JLARC staff plan to complete the review of Virginia’s tax preferences and brief their findings to the Commission in November 2011. A report of the Commission's findings will be submitted to the General Assembly and the Governor as a Senate document, and an executive summary and the report will be submitted to DLAS, no later than December 31, 2011.