Saturday, May 25, 2024

Senate committee approves internet tax collection bill, rejects ITEP change

by BIZ Magazine

By David Jacobs | The Center Square

A Louisiana state Senate committee on Friday advanced a bill that would force companies that maintain internet marketplaces to collect sales taxes, but it rejected one that seeks to let legislators change the state’s industrial property tax incentive program.

Senate Bill 138 by Sen. Bret Allain would apply mainly to companies that facilitate sales by third parties through their online platforms. Allain said the bill stems from a Louisiana Supreme Court decision that Walmart didn’t have to collect sales taxes on third-party sales through its website.

This year’s legislative regular session is not a fiscal session, which means new taxes cannot be considered. But the bill does not levy a new tax, it makes marketplace facilitators responsible for collecting the sales taxes that already are supposed to be paid, officials said.

“This could be the only bill this year that actually collects money,” Allain said.

Luke Morris, assistant secretary with the Louisiana Department of Revenue, said many marketplace facilitators already are remitting sales taxes voluntarily. About $41 million has been collected that way during the current fiscal year, he said.

The change may lead to more money for state and local governments because of increased compliance, but it’s impossible to say for sure, Morris said.

Senate Bill 187 by Sen. Bodi White called for a constitutional amendment to allow the legislature to write the rules that would govern the state’s controversial industrial property tax incentive program, better known as ITEP. Currently, the governor decides how the program works, appoints most of the members of the board that reviews applications, and has discretion to accept or reject applications.

White said his bill wouldn’t take away the governor’s authority, but it would let legislators have a say by writing the rules, as it does for every other incentive or tax break.

For decades, governors and the state board have awarded to manufacturers local property tax breaks without needing permission of local governments that otherwise would collect those taxes. Gov. John Bel Edwards in 2016 issued an executive order giving local entities a say in the process.

While the vast majority of applications have been approved, some have not. Business advocates say the uncertainty involved in the program and the difficulty of dealing with various local entities has made companies less likely to invest in Louisiana.

White said very few projects are in the pipeline because of that uncertainty. Jim Patterson with the Louisiana Association of Business and Industry said local governments shouldn’t worry about losing control over local property taxes again; in fact, the legislature could codify local control, rather than risk it being taken away by some future governor.

“I don’t see any way that it goes back to the way it used to be,” Patterson said.

But other members said they feared the loss of local control, and said the process already is working well in their districts.

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