By David Jacobs | The Center Square
The Louisiana Senate approved two new tax benefits Sunday for businesses despite concerns the measures would chip away at state funding without offering much of a return for the taxpayers.
Like many other tax breaks and incentives lawmakers have approved this year, the measures were pushed by a business task force legislative leadership created to suggest ideas to stimulate the economy and repair some of the damage caused by the COVID-19 pandemic and response.
House Bill 13 would extend the state’s enterprise zone payroll subsidy program for new hires, which is set to expire next year, and allow restaurants, bars and retail trade businesses with 50 or fewer employees to participate. Those types of businesses previously had been part of the program because subsidizing them was found not to stimulate new businesses, lawmakers said.
Sen. Barry Milligan, R-Shreveport, said it could help businesses that are “on the brink” of going out of business. Sen. Troy Carter, D-New Orleans, pointed out the program only is for new hires and does not provide an incentive for bringing back laid off workers.
Sen. Jay Morris, R-West Monroe, said the change won’t stimulate hiring because businesses will make hires based on their needs, not to get an incentive. He said just because the business task force recommended something doesn’t necessarily make it a good idea.
Sen. Karen Carter Peterson, D-New Orleans, argued lawmakers should hold off until October before approving new tax breaks or benefits. Legislators likely will be in a special session again, and they’ll have a better idea of how the state’s economy is recovering.
Legislators made the same argument when they voted to immediately not spend more than $70 million for planned raises and general government operations, as Peterson reminded them.
Senators voted 26-12 in favor of the bill, which goes back to the House for possible concurrence on amendments.
Senators also approved and sent back to the House, this time with a 29-9 vote, a measure to increase the proportion of sales tax collections businesses are allowed to keep from .935 percent and 1.1 percent. They reduced the monthly limit from $1,500 to $1,200 in hopes of controlling the cost.
The compensation rate had been 1.1 percent before lawmakers reduced it as part of an effort to close a revenue shortfall and balance the state’s budget. Some legislators worried the change, while small in and of itself, was part of a worrying trend of doling out tax breaks that could return state government to the structural deficits of previous years.
“These things aren’t free, and they can come back to harm you,” Morris said.
Supporters, however, again argued the change, which won’t mean much to large businesses, could boost small businesses that are struggling and provide an important part of state and local government tax bases.
“We’re really helping the smallest of the small,” said Sen. Heather Cloud, R-Turkey Creek.