Post by Okwes on Jul 2, 2006 17:01:04 GMT -5
Jun 26, 2006 — WASHINGTON (Reuters) - American Indian tribal governments would get limited ability to issue tax-exempt governmental bonds for projects such as infrastructure, housing and schools under a bill introduced on Monday by two members of the U.S. Senate Finance Committee.
The "Tribal Government Tax-Exempt Bond Parity act of 2006" is being sponsored by Montana Sen. Max Baucus, the top Democrat on the Finance Committee, and Oregon Sen. Gordon Smith, a Republican member.
The senators said in a press release that the 1982 law that governs federal tax affairs for tribal governments effectively excludes them from issuing tax exempt bonds because the "essential government functions" for which bonds must be issued are generally defined as projects of state and local governments only.
Due to the difference, tribal bonds generally require a higher interest rate and prohibitive debt service, they said.
"Tribal governments should have the same resources that states and cities have to build decent public schools and pave safe roads, and tax-exempt bonds are a useful tool to fund those essential projects," Baucus said in a statement.
"Congress needs to pass this bill and show a commitment to equality for native communities," he added.
The Internal Revenue Service in recent years has stepped up its audits of tax-exempt conduit bonds issued by states and other authorities on behalf of tribal governments, putting a cloud over the tribal financing market.
The IRS has declared some of these borrowings for such projects as hotel and casino resort-related facilities as taxable. Last year, the IRS issued a memorandum stating that tax-exempt bonds could be used only to finance "essential government functions."
Copyright 2006 Reuters News Service. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
The "Tribal Government Tax-Exempt Bond Parity act of 2006" is being sponsored by Montana Sen. Max Baucus, the top Democrat on the Finance Committee, and Oregon Sen. Gordon Smith, a Republican member.
The senators said in a press release that the 1982 law that governs federal tax affairs for tribal governments effectively excludes them from issuing tax exempt bonds because the "essential government functions" for which bonds must be issued are generally defined as projects of state and local governments only.
Due to the difference, tribal bonds generally require a higher interest rate and prohibitive debt service, they said.
"Tribal governments should have the same resources that states and cities have to build decent public schools and pave safe roads, and tax-exempt bonds are a useful tool to fund those essential projects," Baucus said in a statement.
"Congress needs to pass this bill and show a commitment to equality for native communities," he added.
The Internal Revenue Service in recent years has stepped up its audits of tax-exempt conduit bonds issued by states and other authorities on behalf of tribal governments, putting a cloud over the tribal financing market.
The IRS has declared some of these borrowings for such projects as hotel and casino resort-related facilities as taxable. Last year, the IRS issued a memorandum stating that tax-exempt bonds could be used only to finance "essential government functions."
Copyright 2006 Reuters News Service. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.