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GOP-backed tax breaks win House support, as Democrats object

2 years 7 months 3 weeks ago Wednesday, June 17 2020 Jun 17, 2020 June 17, 2020 6:29 AM June 17, 2020 in News
Source: Associated Press

BATON ROUGE, La. (AP) — The Louisiana House’s tax break debate Tuesday highlighted the chamber’s deepening partisan divisions in the state’s coronavirus response effort.

Republicans say the package of multimillion-dollar tax breaks they are pushing will help companies struggling amid the outbreak, while Democrats say the business lobby is taking advantage of the pandemic to unravel curbs put on ballooning incentive programs in recent years.

“Our businesses are in dire need right now,” Republican Rep. Lance Harris, of Alexandria, said during debate over a tax break.

Democratic Rep. Ted James, of Baton Rouge, repeatedly asked his colleagues to reject the proposals.

“I’m going to keep coming down here to urge us not to use the COVID pandemic to pass bad tax policy,” he said.

The agenda for the ongoing special session crafted by Republican legislative leaders largely focused on policies sought by business organizations. Democrats argue that left little room to introduce bills to help families and individual workers who also are struggling to recover from the virus.

The continuing disagreement over how best to respond to the outbreak in a state that was once a national hot spot for the virus surfaced in Tuesday’s debate over four measures that would expand existing business tax incentive programs and suspend part of a tax charged on businesses.

Three of the bills were sent to the Senate for debate.

In several instances, the financial impact of the bills isn’t entirely clear, raising questions about how lawmakers will balance the budget without knowing the tax breaks’ costs. And it’s unclear if Democratic Gov. John Bel Edwards will agree to many of the tax proposals if they reach his desk.

In a letter to lawmakers vetoing a tax break passed in the regular session that ended earlier this month, Edwards cited concerns about potential costs amid the economic uncertainty of COVID-19. He wrote of worry about similar measures “running in this current special session without thoughtful consideration of what impact such legislation would (have on) the state’s budget.”

One measure that won House passage would keep in place — and expand — an expiring payroll subsidy program to retailers, restaurants, bars and hotels that offer higher-paying jobs and health benefits. That passed with a 68-26 vote.

Another bill would broaden a tax credit program for businesses that create jobs in certain underserved areas deemed Enterprise Zones to allow retailers, restaurants, bars and hotels to participate. The House voted 62-32 for the proposal.

The third bill that received House passage would allow businesses required to collect sales taxes to keep a larger portion of those tax collections for themselves. It went to the Senate with an 88-3 vote, generating little pushback from Democrats.

Democrats bottled up a fourth proposal by Rep. Stuart Bishop, the Republican chairman of the House tax committee, that would have suspended part of the state’s corporate franchise tax.

The House voted 67-25 for the measure, but that was three votes short of the two-thirds support needed. The tax suspension carries a higher hurdle for passage than tax breaks, and Republicans don’t hold a two-thirds majority in the chamber.

“This offers relief to small mom and pops, to small businesses that are competing with big box stores,” said Bishop, of Lafayette.

Opponents argued small businesses don’t pay the corporate franchise tax because they file under a different part of the state’s tax system.

Democrats said several measures proposed by Republicans were so wide open that large retailers that never shut down during the pandemic, such as Walmart and CVS, would benefit even though they don’t need assistance. Some of the GOP bill sponsors said they’ll work to tighten the language of the bills in the Senate.

Lawmakers in the regular session also earmarked $300 million in federal coronavirus recovery aid for small business grants.

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