Towards enhancing tax abatement transparency: Reviewing the promises and limitations of GASB 77

Abstract

In August 2015, the Government Accounting Standards Board (GASB) adopted Statement 77, requiring government disclosure in audited financial reports of a particular type of tax expenditure, tax abatements. GASB's reporting standards move tax abatements from a budgetary environment to an accounting environment. This paper evaluates GASB 77's provisions to encourage an early and on-going dialogue about the Statement's prospects for achieving greater transparency compared to existing tax expenditure reporting efforts. We conclude that GASB 77 will be most beneficial to consumers of financial information in medium and large jurisdictions where there is no alternative tax abatement disclosure platform, or where the alternative offers less transparency than what can be achieved through financial reporting.

Do Economic Development Tax Abatements Affect School Finances?

“…Neither captured in revenue and expenditure statements nor subject to disclosure requirements (unless so specified in state statutes), local tax expenditures were a hidden cost prior to the existence of Statement No. 77 (Propheter, 2017). While all but four state governments (Missouri, North Dakota, Utah, and Virginia) issue tax expenditure reports on a regular basis, Montgomery County, Maryland, is the only local jurisdiction known to do so.…”

Measuring quality of popular annual financial reports: Features of the rewarded US reporting municipalities

“…Previous studies consider the PAFR as public accountability tool that illustrates the activities of the municipality with simplicity and transparency, facilitating the communication paths between government and citizens (Biancone et al, 2019; Jordan et al, 2017; Manes‐Rossi et al, 2019; Propheter, 2017). In this regard, it is possible to observe how the quality and quantity of information disclosed by the municipality are strictly connected to the size of the population served (Alcaraz‐Quiles et al, 2014).…”