Analysis: Now What? With LA Business Tax Shelved, Path Unclear

Gov. John Bel Edwards

BATON ROUGE (AP) — That was anticlimactic.

         In the end, Gov. John Bel Edwards' tax on business sales was killed without a single legislative vote, a blow to the Democratic governor's push to revamp the state tax structure and end boom-and-bust cycles of budget instability.

         But no one could suggest the defeat was a surprise.

         The concept was a last-minute introduction into the tax debate that never gained a bit of traction in the Legislature and that wasn't endorsed by a task force formed to recommend the best ways to rewrite Louisiana's tax laws.

         The idea of a tax on companies' gross receipts wasn't taken seriously by most lawmakers, and by introducing it so late, Edwards didn't appear to make a full-court press for the idea, almost seeming to assume its fate was sealed.

         With the bill pulled from consideration in the House tax committee last week, the real debate begins on how to stabilize Louisiana's finances.

         Edwards said House Republicans need to detail their plan to balance next year's budget and address the expiration of $1.3 billion in temporary taxes a year later, in mid-2018. Most budget and tax bills must start in the House.

         "This is a two-month session, so it isn't like we have an awful lot of time to get this done. And there is no reason why we should not rise to the challenge and fix these problems in this session so we don't have to have special sessions before July 1, 2018," Edwards said.

         The House GOP approach will start to become clearer Monday as the majority-Republican Appropriations Committee advances its budget proposal for the financial year that begins July 1.

         House Speaker Taylor Barras and Committee Chairman Cameron Henry, both Republicans, said the budget proposal will be a "standstill" approach. The plan would keep agencies largely at the same level of state financing they received this year, with some mandatory spending increases funded. It would use less than the full amount of state money available, to hedge against the possibility that income projections won't pan out.

         On taxes, the House Ways and Means Committee is moving past the governor's gross receipts tax and will start voting on other proposals.

         "I think we have the menu that we need to have a healthy discussion," Barras said. "My hope is to get a good deal of that to the floor."

         One concept in which Barras said House lawmakers have expressed interest comes from Rep. Kenny Havard, a Republican from St. Francisville.

         Havard's bill, up for debate Monday, would enact a new business tax for larger companies that file their taxes through the state's corporate income and franchise tax laws. Those income and franchise taxes would go away, replaced with what Havard calls a "profit margins tax."

         Companies would be unable to take advantage of loopholes that let them shift losses around to lower their Louisiana tax payments and instead, the state would calculate a tax off a business' federal taxable income.

         Havard expects with changes, his business tax would raise about $200 million more a year for state coffers. He called that "a good tradeoff for tax reform, which is what we promised the people we would do."

         Another idea up for discussion is Edwards' proposal to extend sales taxes to services, such as digital streaming services, cable television, landscaping and massages. Barras said House lawmakers are "hot and cold" on the concept.

         "There are times when you get a list of services and people seem to think that might work. And there's another list of services that sends people in a panic," he said. "I think the difficulty is going to be coming up with a list of services that is passable."

         Other talk continues about renewing a temporary 1 percent increase in the state sales tax and the temporary removal of some sales tax breaks.

         "I know most members would like to see the temporary measures go away. There could be some that possibly get extended," Barras said.

         Time is getting tighter to devise an approach. Lawmakers are nearing the midpoint of a session that must end June 8, with no coalescing around a tax package so far.

         – by AP Reporter Melinda Deslatte


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