Thursday, July 18, 2024

House committee advances new business subsidies, new tax on fantasy sports

by David Rockett

By David Jacobs | The Center Square

After approving more than $100 million in business tax breaks and incentives Tuesday, a Louisiana House committee advanced a couple more Thursday, though they pumped the brakes on one and even advanced a new tax.

The discussions echoed those heard throughout this year’s sessions. Skeptics worried about depriving governments of revenue at an uncertain time, while supporters pointed to that same uncertainty to justify boosting businesses that may provide jobs and tax revenue.

House Bill 52 by Lafayette Republican Rep. Jean-Paul Coussan would increase the state’s software and digital media tax credit incentive from 18 percent of the money invested to 20 percent, though the extra 2 percent would be used for training new employees from targeted demographics such as women, minorities and veterans. It also would expand eligibility for the credit to information technology services and cybersecurity.

The subsidy currently costs the state almost $11 million per year, so the extra 2 percent would add about $1.2 million, legislative economist Greg Albrecht said. But he said the potential cost to the state of expanding eligibility is much larger and he did not venture a guess Thursday about the price tag.

“I’m hoping the fiscal note is a billion dollars,” Rep. Beau Beaullieu, a New Iberia Republican, said. “Because that means it brings jobs to Louisiana.”

Even Rep. Tammy Phelps, a Shreveport Democrat who has opposed many of the tax breaks and subsidies that have come through the House Ways and Means Committee, did not object to House Bill 52.

“This is probably the first one that has not given me heartburn,” she said.

The committee also advanced House Bill 16, meant to provide a state tax credit to restore historic buildings that currently are not eligible for the existing credit because they’re not in a historic district. Rep. Michael Echols, the Monroe Republican who authored the bill, said it could help to revitalize and bring back into commerce historic buildings in rural areas, which typically don’t have the well-established historic districts found in New Orleans or Baton Rouge.

The committee moved the bill without objection, but not before extracting a promise from Echols to limit the bill to areas below a certain population threshold to control the cost.

The committee balked at advancing House Bill 25 by Covington Republican Rep. Mark Wright, which would allow corporations to deduct past losses from future income taxes. The proposal mirrors a similar provision in the federal CARES Act meant to improve cash flow for companies affected by the COVID-19 pandemic and response.

But the fiscal note to the original bill predicts a state revenue loss of more than $800 million over five years, raising serious concerns about the future impact on state finances.

“It’s one thing to agree with the concept,” Rep. John Stefanski, a Crowley Republican, said. “It’s another thing to put yourself in a bind.”

Wright agreed to withdraw the bill and present another version at the committee’s next meeting, though he expressed concerns about running out of time to get through the legislative process during this month’s special session.

The committee approved an 8 percent tax on fantasy sports contests, which Stefanski said is in line with what other states charge. In 2018, voters in most parishes legalized playing online fantasy sports for cash prizes, though lawmakers have so far failed to establish the regulations and tax rates.

Gov. John Bel Edwards has signed a bill passed during the regular session that sets up the framework, so setting the tax rate is the final step to legalization. Stefanski warned lawmakers not to expect a windfall; estimated revenue is less than $400,00 per year.

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