Tuesday, July 23, 2024

Lawmakers begin moving long list of business tax breaks

by BIZ Magazine

By David Jacobs | The Center Square

Louisiana legislators on Tuesday advanced a long slate of tax cuts and incentives that could be worth well over $100 million.

The bills still have a long way to go before reaching the governor’s desk. Authors repeatedly promised they would try during the process to address colleagues’ concerns about losing state revenue.

Supporters said they wanted to boost the prospects of businesses harmed by recent restrictions meant to control the spread of COVID-19, and said keeping companies open will keep people working and support state and local tax bases.

“These businesses are struggling,” said Jason DeCuir, who chairs a business-heavy task force chosen by legislative leaders to set an economic recovery agenda.

House Bill 17, for example, which suspends the state’s corporate franchise tax, could put a few hundred extra dollars in the business owner’s pocket, enough to pay a utility bill, DeCuir said. The suspension only applies to the first $300,000 of a company’s assets, so the benefit would be most meaningful for small businesses, he said.

The change would keep an estimated $40.8 million out of state coffers over five years, and no revenue offsets or spending cuts were discussed to make up the difference. Some lawmakers said doling out tax breaks in past sessions helped lead to a structural deficit the state only recently climbed out of.

“We’ll be in a deficit [again] the way we’re going,” said Rep. Tammy Phelps, a Shreveport Democrat. And when cuts are needed, education and health care often are first on the chopping block, Democrats noted.

House Bill 13, another measure the House Ways and Means Committee advanced Tuesday, would extend the life of the state’s Enterprise Zone program, meant to encourage investment in low-income areas, to retailers, restaurants and bars. Louisiana’s economic development department generally doesn’t incentivize jobs that don’t offer benefits or above-average wages, Department of Revenue Secretary Kimberly Robinson said.

“Let’s just be careful,” she said. “Everything on the [committee’s] agenda is for business.”

Legislators during the regular session approved a $300 million relief fund for small businesses paid for with federal CARES Act dollars. Gov. John Bel Edwards has not said whether he will sign that bill or if he will support any or all of the tax relief and incentive bills pending in the special session.

The committee also approved a possible constitutional amendment that would give the legislature the power to control sales tax collection, a possible first step toward establishing a single sales tax collector for the state.

Local governments currently have the right to collect their own sales taxes, which they say allows them to ensure the money is spent how their constituents want it spent. But critics say the current decentralized system is confusing and difficult for companies to navigate, and possibly unconstitutional in the wake of the U.S. Supreme Court’s Wayfair decision.

Louisiana legislators ended their regular session June 1 without passing a state budget or several other major spending bills. The state constitution says a balanced budget must be approved before the next fiscal year begins July 1.

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