January 27, 2009 in Opinion

Our View: Commission’s explanation on tax deals is past due

 

If Idahoans want to know more about the tax breaks that routinely go to out-of-state corporations, it won’t be the Idaho Tax Commission that tells them. Not willingly, anyway.

It’s nothing sophisticated. Companies set up business in Idaho, then decline to pay taxes due. When they get caught and are ordered to pay, they protest, and the commission approves compromise settlements that reduce the companies’ tax bills by hundreds of thousands of dollars. And state law says it all has to be kept confidential.

The practice, which Attorney General Lawrence Wasden has determined is within the Idaho Tax Commission’s legal authority, came to public attention last summer thanks to a whistleblower report by veteran state tax auditor Stan Howland.

Lawmakers from both parties expressed concerns about the situation. And why wouldn’t they? The voters who elect them deserve to know whether state tax laws are being administered fairly, consistently and effectively. Yet Howland says Idaho has a reputation as a pushover, and out-of-state businesses consistently use the process to escape tax liability.

And it happens out of public view, so there’s no way to know if it’s defensible.

Wasden’s report and others have called for the commission to make its rules more revealing, and Gov. Butch Otter directed that they be rewritten. The rewrite, disappointingly, did not achieve the transparency that is needed.

Meanwhile, an annual report, ordered by Otter last August, was to be delivered to the Legislature this month. Last week, lawmakers were still waiting, and some of them, including Senate Tax Chairman Brent Hill, R-Rexburg, let their impatience show.

“I really want to make it clear that on behalf of the people, we’re holding your feet to the fire on this,” he told Tax Commission Chairman Royce Chigbrow. Chigbrow confessed the report was on his desk, waiting review, but he promised to “get that off my desk.”

Chigbrow insists the compromise settlements are prudent because they save the state substantial legal expenses that are incurred when contested cases go to court. That won’t comfort ordinary residents who, lacking the legal and accounting muscles of a multistate corporation, see an unbalanced tax system that extends favoritism to the affluent.

If state lawmakers want to show that they’re on those stressed residents’ side, they need to stop waiting for the Tax Commission to have a change of heart and exercise their own legislative authority. At the least, they should make the Tax Commission’s work visible and hold the commission itself accountable.


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