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La lawmakers push tax cuts to assist recovering retailers, restaurants, other companies

3 months 1 week 2 days ago Wednesday, June 10 2020 Jun 10, 2020 June 10, 2020 5:03 AM June 10, 2020 in News
Source: Associated Press

BATON ROUGE, La. (AP) — Businesses would receive millions in tax breaks under bills that started moving Tuesday in the Louisiana House, pitched by Republicans as a way to help retailers, restaurants and other companies struggling to recover from coronavirus closures.

The proposals, which won overwhelming support in the House Ways and Means Committee, are estimated to siphon $14 million and possibly millions more from the state treasury in the budget year that begins July 1. Those estimates would grow to at least $130 million over five years.

The budget awaiting debate on the House floor, which assumes $9.2 billion in general state tax collections, doesn’t account for the tax cuts. Spending would have to be cut to stay in balance, if the tax measures win final passage.

Supporters said the measures being considered in the special session would help rebuild small businesses hammered by the coronavirus. The session agenda largely was crafted by a legislative task force made up of more than 60 business leaders, local chambers of commerce representatives and business lobbyists.

“These are businesses that shut their doors to keep us safe. They were up and they were thriving” until the coronavirus outbreak, said Jason DeCuir, chairman of the legislative task force and a tax lawyer.

The largest tax measures headed to the House floor would temporarily suspend part of the corporate franchise tax, expand a payroll subsidy program and broaden an existing tax credit program that had been scaled back in recent years. Another would allow businesses required to collect sales taxes to keep a larger portion of those tax collections for themselves.

Critics said Louisiana can’t afford the financial hit from the lost revenue, particularly after the virus already has caused sizable losses in tax collections. They worried about stripping dollars from health programs, public safety services and college campuses.

“We still have a state to take care of,” said Shreveport Rep. Tammy Phelps, who was among several Democrats to vote against some tax breaks.

Lady Carlson, with a group of faith-based and community leaders called Together Louisiana, said lawmakers are giving the business community too much sway over the Legislature’s financial debates. Together Louisiana has pushed for tighter restrictions on tax break programs.

“You’re not listening to families in this. You’re digging us into a deeper fiscal hole,” Carlson said.

Bill sponsors said if businesses fail or shut down permanently, that would be a greater hit to the state. They said those businesses and their employees pay the taxes that provide programs and services.

“It’s about people. It’s about livelihoods,” said Rep. Mark Wright, a Covington Republican.

Ways and Means Chairman Stuart Bishop, a Lafayette Republican, didn’t offer recommendations for where lawmakers should cut the budget to account for the tax cut he’s proposing — which would cost an estimated $9 million in the upcoming budget year and nearly $41 million over its five-year lifespan.

“But I know if we don’t do something to protect the small mom-and-pop businesses in the state of Louisiana, the budget gaps will be bigger,” Bishop said.

In the regular session that ended June 1, lawmakers also earmarked $300 million in federal coronavirus recovery aid for small business grants.

Gov. John Bel Edwards objected to steering the dollars away from his plans for local government virus expense reimbursement. The Democratic governor hasn’t said whether he’ll sign the business grant spending plan, and he’s been skeptical about the tax breaks moving through the special session.

Edwards’ revenue secretary, Kimberly Robinson, noted the governor and lawmakers just spent much of the last four-year term setting the tax structure to stabilize state finances and end years of budget shortfalls. She said the Edwards administration didn’t want to upend that.

“We are interested in small businesses. We are interested in helping them,” Robinson told the House committee. But she added: “Those small businesses also depend on those state services.”

Other measures sent to the full House by the committee could shrink the property taxes paid by businesses to local government and could start the process of centralizing state collections.

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