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Oregon Tax Expenditures
Introduction
 
Tax Expenditure Defined 
 
The 1995 Budget Accountability Act defines a tax expenditure as: 
 
any law of the Federal Government or of this state that exempts, in whole or in part, certain persons, income, goods, services, or property from the impact of established taxes, including, but not limited to tax deductions, tax exclusions, tax subtractions, tax exemptions, tax deferrals, preferential tax rates, and tax credits.
The term "tax expenditure" derives from the parallel between these tax provisions and direct government expenditures. For example, a program to encourage businesses to purchase pollution abatement equipment could be structured with an incentive in the form of a tax credit or a direct payment by the state to businesses. Tax expenditures can be viewed as: (1) providing financial assistance to certain groups of taxpayers, (2) providing economic incentives that encourage specific taxpayer behavior, or (3) simplifying or reducing the costs of tax administration. While the third of these policy objectives eliminates inefficiencies within the tax code, the first two could be implemented with direct expenditures rather than tax expenditures.
 
 
Tax Expenditure Reports
This biennial report accompanies the Governor's recommended budget submitted to the Legislature before each session. It describes provisions of Oregon tax laws that impart special treatment to a group of taxpayers, such as exclusions, credits, deductions, and exemptions. The report describes each provision and provides revenue loss estimates and evaluations of effectiveness. The report also includes summary tables that group the tax expenditures according to tax program and budget program/function. 
 
 
 
Tax Expenditures Related to Economic Development
The following information is presented to satisfy the reporting requirements of House Bill 2825, passed into law during the 2011 Legislative Session. House Bill 2825 relates to public access to economic development tax expenditure information.
 
Business Oregon
 
Strategic Investment Program
 
The Strategic Investment Program (SIP) exempts a portion of large capital investments from property taxes. The program is available statewide for projects developed by "traded-sector" businesses, most often used for manufacturing firms. "Traded sector" is defined in Oregon law as "industries in which member firms sell their goods or services into markets for which national or international competition exists."
Depending on the investment size, the Strategic Investment Program can offer exceptional benefits in terms of net present value.
 
If you have additional questions, please contact Art Fish at arthur.fish@state.or.us
 
 

 
 
Oregon Investment Advantage
 
This income tax exemption program helps businesses start or locate in most Oregon counties with a multi-year income tax holiday.
 
Companies setting up operations in an eligible county can be certified at least eight times to annually deduct or subtract taxable income related to those operations, potentially eliminating any state business income tax liability for that period, which begins at least 24 months after the commencement of new operations.
 
General company eligibility requirements include:
  • the creation of at least five new full-time, year-round jobs that receive minimum level of compensation;
  • facility operations need to be the first of their kind in Oregon for that company; and
  • facility operations cannot compete within the local economy.
Having five or more facility employees is a requirement with each application for annual certification. The uniqueness of operations to the company and other requirements generally pertain only to the time of application for preliminary certification.
 
If you have additional questions, please contact Art Fish at arthur.fish@state.or.us
 
 

 
 
 

Business Energy Tax Credit

(Renewable Resource Equipment Manufacturing (Mfg BETC))

Preliminary Certification

Business owners of facilities used to manufacture equipment, machinery or other products that will be used exclusively for renewable energy resource generation/harvesting may be eligible for a state tax credit. The tax credit is 50% of eligible facility costs. If issued, the tax credit is claimed over five years (10 percent per year) and can be rolled over according to Oregon Revised Statute 315.341(5).
The maximum total cost eligible to receive a preliminary certification from the Director of Business Oregon for tax credits in any calendar year may not exceed:
  • $2.5 million in the case of a facility used to manufacture electric vehicles or component parts of electric vehicles ("Component parts of electric vehicles" does not include parts that may be used in both electric and conventional vehicles; or batteries.)
  • $40 million, in the case of any other facility.
Application for the tax credit is subject to a detailed technical and financial review of the financial model and plan by a third party. Before the Director will approve a final certification, the department will require the applicant's commitment to performance measures for the facility including job creation and retention requirements and other economic benchmarks through execution of a performance agreement or other similar agreement for the facility. Failure to comply with the terms of the performance agreement or other similar agreement may be the basis for denial or revocation of the final certification. The credit also is subject to clawbacks should performance measures not be met.
 
If you have additional questions, please contact Donna Greene at donna.l.greene@state.or.us
 
 

 
The Oregon Governor's Office of Film & Television 
  
 
Attached is the detailed information required to remain in compliance with House Bill 2825.  The following is provided as a brief addendum for a more detailed description of the information.
 
 
The Greenlight Oregon Labor Rebate (Greenlight) is designed to recruit film, television and television commercial production to Oregon.  In calendar year 2011 the Oregon Film & Video Office recruited over $110,000,000 of film and television production spending in the state as well as an additional $22,000,000 of television commercial spending.  Greenlight is an essential tool along with the Oregon Production Investment Fund in recruiting film and TV production and it is also a valuable tool in expanding the TV commercial sector.  In order for a producer to qualify for Greenlight, they must meet a set of criteria including:
 
·        Submit an application (found via http://oregonfilm.org/incentives/)
·        Film and TV producers must spend at least $1,000,000 in Oregon on a project.
·        TV Commercial producers must spend at least $1,000,000 in Oregon over one calendar year.
·        Submit detailed report of Oregon expenses subject to an audit.
 
Greenlight provides a 6.2% rebate on qualified Oregon labor expenditures.  This is currently defined as labor expenditures subject to Oregon withholding taxes.
 

 

 
For further information or questions, please contact Vince Porter, Executive Director, Governor’s Office of Film and Television at vince@oregonfilm.org or by visiting http://www.oregonfilm.org 

 

 
Business Energy Tax Credit Program 
  
Every effort has been made to ensure the data are complete, but these records reflect information reported to this agency by others. The Oregon Department of Energy is not responsible for data that is misinterpreted or altered in any way.  
 
If errors are discovered after publication of the records, the data are corrected in the electronic files.  It is estimated that there is a margin of error of less than one percent. 
 
Notes: This data reports tax credits issued and may differ slightly from the tax credits allowed due to rounding. The tax credit rate depends on the system type and the project completion date. Tax credits for Homebuilder Projects (classified as renewable energy projects) are determined on a case-by-case basis.  Other renewable energy projects and High-Efficiency CHP projects completed after 12/31/2006 qualify for a 50% tax credit. Some projects have split types and tax credits. All other projects qualify for a 35% tax credit. 
 
ODOE does not track energy savings/production for all projects including many RD&D, Recycling, Renewable Energy Manufacturing, LEED for "Commercial Interior", and Transportation projects. RD&D projects, in some cases, are subcategories included in other project types.
 
Agency certification for each taxpayer is based on a number of documents including the Application for Preliminary Certification, technical energy calculations, Application for Final Certification, and Inspection Data Collection.  Other information provided by applicants may include maps, business plans, and blueprints.  None of these documents are captured in the BETC database. 
 
Additionally, documents provided to the agency for certification determination such as financial statements, customer lists, production, sales and cost data, and marketing information are subject to protection under the Oregon Public Records Law. 
  

  
For questions regarding the Business Energy Tax Credit Program, please contact: Diana Enright, Oregon Department of Energy.