Gov. Henry acts to stop tax credit abuses
Office of Governor Brad Henry
Oklahoma State Capitol, March 30, 2006

Oklahoma City  Gov. Brad Henry today acted to curb abuses in two state tax incentives programs, issuing an executive order that places an administrative roadblock in the path of individuals trying to claim inflated state tax credits. The governor also urged lawmakers to quickly pass legislation that would permanently stop program abuses.

"The incentive programs were designed to create new jobs in Oklahoma, not to reward individuals who operate an accounting shell game to claim inflated tax credits," said Gov. Henry. "The only way to stop the abuse permanently is to change the law, but in the meantime, we can take steps that will make it more difficult for people to play the system for an unjust profit."

The governor has no authority to suspend the incentive programs in question, but his executive order will assist the Oklahoma Tax Commission in the tax credit process. Currently, a tax credit candidate may ask the OTC to approve a binding, pre-approval letter based on its business investment proposal. The executive order would put a moratorium on that pre-approval process, forcing candidates to move forward without any assurance that they would actually qualify for tax credits.

"Until legislators send me a bill that changes the law, all we can do is put up administrative roadblocks and increase scrutiny. Im urging tax commissioners to be especially vigilant as they monitor this tax credit program," said Gov. Henry.

The governor took action after reviewing concerns raised by Senator Ted Fisher, a longtime state legislator who authored the original legislation that established the incentive programs. According to published reports, some individuals are exploiting a loophole in the law, allowing them to claim more tax credits than justified by their actual investment.

State officials detected a sudden and dramatic increase in requested tax credits last year. Sen. Fisher and others believe some individuals are claiming more tax credits by artificially inflating their investment with loans that are never applied to the proposed economic development venture.

Sen. Fisher has authored legislation to close the loophole in question. The measure has passed the Senate and is awaiting action in the House.

Gov. Henry is asking lawmakers to put the bill on a fast track so that he can sign it into law as soon as possible.

"Every day that passes potentially costs the state and Oklahoma taxpayers millions of dollars. The sooner we close the loophole, the better for everyone," said the governor.