Newton Independent
While the Iowa Revenue Estimating Conference was lowering projected state revenues for the fiscal year by nearly $415 million on Wednesday, the Iowa Department of Revenue was releasing a report that shows Iowa faces the potential of $566 million in tax credit liabilities by fiscal year 2011.
In releasing its Tax Credits Contingent Liabilities Report, the department of revenue noted that its forecast "points to an increase in the impact of tax credits on general fund revenues."
"The number of tax credit programs has increased over the past several years," the study noted. "The amount of credits claimed under each tax credit program often increases as more taxpayers learn about the credits. More tax credits have also been made refundable or transferable, which leads to increased claims of those tax credits. Overall, the data point to tax credits as an increasingly important factor for which adjustments must be made to state revenue estimates."
In summarizing its 15-page report, the department of revenue notes there has been "tremendous growth in the amount of credits awarded" since 2001, when just over $100 million in credits were issued. By 2007, the report states, nearly $400 million in tax credits were issued.
Tax credit awards decreased in each of the subsequent fiscal years to $240 million and $160 million, respectively, the report states, largely due to the recession and the depressed market for biofuels.
The revenue department also notes that the potential liability of tax credits continues to rise. In fiscal year 2007, $219 million in tax credits were claimed against Iowa taxes. The potential amount is expected to increase to more than $566 million by fiscal year 2011, a 150 percent increase.
The full report can be read here.
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