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Louisiana tax rewrite again drawing business resistance

3 months 2 weeks 2 days ago Thursday, April 15 2021 Apr 15, 2021 April 15, 2021 6:50 AM April 15, 2021 in News
Source: Associated Press

BATON ROUGE, La. (AP) — Republican state lawmakers trying to muscle through a wide-ranging rewrite of Louisiana’s tax laws Wednesday ran into the same problem that has bedeviled previous legislative efforts, opposition from special interest groups trying to protect tax breaks given to industry.

The House Ways and Means Committee, which handles tax measures, delayed votes on two bills aimed at paring back the myriad of tax breaks that Louisiana has on the books. Neither one had an analysis yet from the nonpartisan Legislative Fiscal Office of how much money would be saved from cutting the tax breaks.

But a bigger hurdle to passage looms.

Rep. Stuart Bishop, the Lafayette Republican who chairs the House committee, acknowledged the opposition to his 100-page proposal to eliminate an array of tax exemptions, credits, deductions and rebates. He called it “the most controversial bill I’ve ever handled.”

Lined up to testify against the idea were lobbyists representing many of the businesses that would lose the tax breaks, including banking, the chemical industry, oil and gas companies, insurance companies and more.

Bishop is among the Republican legislative leaders trying to overhaul the state’s tax structure, to lower the overall tax rates charged businesses and individuals in exchange for getting rid of many of the loopholes on the books.

“We have credits on there that make zero sense,” he said.

Good government groups, tax experts and economists suggest Louisiana needs to simplify its exemption-riddled set of tax laws to make the state more attractive to businesses and people.

But efforts to rewrite the laws have repeatedly run into opposition from special interest groups that claim to support tax restructuring until it involves removing tax breaks that benefit their businesses and members.

Despite the opposition, several members of the Ways and Means Committee suggested they’ll support Bishop’s legislation when he brings it up later in the two-month legislative session. Bishop said he intends to have a debate on the bill.

“Everyone wants tax reform, and everyone wants a better Louisiana, and that’s what this is,” said Rep. Buddy Mincey, a Denham Springs Republican.

Rep. Phillip DeVillier, a Eunice Republican, is offering a more limited proposal that would cut a long list of tax breaks in half. He also stalled consideration of the bill as he awaits a financial analysis — but he faces the same type of opposition.

“It baffles my mind that people would rather protect these credits ... rather than bringing true tax reform,” DeVillier said.

While those bills await a future hearing, the committee did pass a package of bills from Rep. Neil Riser, a Columbia Republican, that would cut business taxes and set a flat corporate income tax rate of 6%.

The proposal would replace the current rates that range from 4% to 8% depending on the level of a business’ taxable income. In exchange for the flat tax rate, companies would lose the ability to deduct the federal income taxes they pay from their state corporate income taxes.

The changes would start in 2023 and cut business tax collections by more than $89 million over the first four years, according to a nonpartisan financial analysis. Those measures head next to the full House for debate.

Riser said the change would give stability to business and to the state treasury, removing a tie to federal tax rates that could soon fluctuate because of tax debates planned in Congress. But Democrats raised concerns about the overall tax cut for business and its impact on state services.

The committee voted 10-6 for the bill setting the flat tax rate.

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