Missouri needs to improve the way it tracks the effectiveness of tax breaks.
State Auditor Nicole Galloway last week said the state doesn't do a good job of tracking the impact of tax breaks, typically pitched as ways to fuel the economy.
We've questioned the state's overuse of tax credits in the past. Tax breaks in general can be a good thing, but the state should have a more effective way to determine whether they provide the promised effects.
Galloway's report, according to the Associated Press, said legislative estimates of the financial costs and benefits of proposed tax breaks are sometimes inaccurate. The auditor said after lawmakers pass new tax exemptions, the state rarely monitors the actual fiscal impact. Of 209 sales and use tax exemptions in place as of June 2016, Galloway's office said the Department of Revenue tracks only three, the AP reported.
That's about one in 70 being tracked - an embarrassingly low number.
Some Republicans easily could dismiss the report by Galloway, a Democrat, as political. Democrats tend to favor higher taxes and more government services while Republicans opt for lower taxes and smaller government. But, hopefully, we can all agree, regardless of who gets tax breaks and how much they get, all tax breaks should be tracked so that lawmakers have better information when making public policy.
Without that knowledge, the legislative process of determining taxes and tax cuts can be a "garbage in, garbage out" scenario, to use the computer term. The better information lawmakers have about the effectiveness of tax cuts, the better decisions they can make about them in the future.
The Department of Revenue agrees the tracking is good but argues it will burden businesses and require more Revenue staffing. It also says reporting errors from businesses would lead to flawed data.
We agree, such tracking will require more work for both parties, but we believe it is worth the effort. And while reporting errors never can be eliminated, tracking efforts still can provide solid information for lawmakers upon which to base decisions.