House approves possible $157 million oil industry tax break; value of exemption disputed

By David Jacobs | The Center Square

Louisiana’s House of Representatives on Tuesday approved a tax break for the oil and gas industry that could be worth $157 million, though supporters said the estimate is exaggerated.

House Bill 29 by Rep. Phillip DeVillier, a Eunice Republican, would give companies a severance tax exemption for new wells or wells undergoing enhancements for two years or until the investment is paid off, whichever comes first.

DeVillier touted the measure as a way to get industry service companies back to work at a time when oil prices are low and demand for fuel has not fully recovered amid the COVID-19-related recession.

“This bill has the ability to create jobs,” he said.

The Legislative Fiscal Office estimates the change could cost the state $157 million over the five-year life of the program. The office assumed most wells would qualify for the full 24-month exemption, an assessment DeVillier disputes.

In fact, supporters of the bill say it could lead to more tax revenue for the state because they believe it will motivate new investment that wouldn’t happen otherwise.

Representatives voted 68-22 to send HB 29 to the Senate.

In other action Tuesday, the House approved:

House Bill 20: Would provide an income tax deduction for families who hired a tutor to facilitate online education for their child or children. The tax break is capped at $5,000, though the bill’s sponsor, Baton Rouge Republican Rep. Rick Edmonds, said it would be worth a couple hundred dollars.

House Bill 26: Would establish a sales tax holiday this year on Nov. 20 and 21 on sales up to $2,500. The Fiscal Office estimates the tax break will save shoppers a total of $4.5 million.

House Bill 64: Would create an Office of Broadband and Connectivity within the governor’s office. The office would not have regulatory authority. Rep. Daryl Deshotel, the Marksville Republican who authored the bill, said the office would be able to coordinate various programs in hopes of expanding broadband access in the state.

House Bill 25/Senate Bill 14: Would expand access to the Louisiana New Markets Jobs Act tax credit that may be claimed against the insurance premium tax, which normally is based on the investment of private capital in a low-income community business. Investments in four parishes affected by Hurricane Laura would be eligible even if not made in a designated low-income community.