Smaller Tax: Estimates For Edwards’ Business Tax Plan Plunge
BATON ROUGE (AP) — Changes that Gov. John Bel Edwards made to his business tax plan in hopes of lessening criticism cut in half the estimate of what the tax will raise, making his budget-stabilizing tax package hundreds of millions short of what he wanted to generate.
The Edwards administration expected the tax to bring in $800 million to $900 million a year when the Democratic governor first introduced a plan to tax companies' gross receipts, essentially taxing their sales without accounting for profit margins or expenses.
But the administration tweaked the proposal before it was filed to respond to complaints that a gross receipts tax would hit certain businesses too hard.
With new carve-outs for certain businesses, Revenue Secretary Kimberly Robinson said recalculations show the bill would drum up an estimated $400 million annually for the state treasury.
She's not expecting the figure to stay that low. The Edwards administration wants lawmakers to tweak the tax further, boosting the estimate to $550 million.
Either way, the gross receipts tax, called a Commercial Activity Tax by the governor, would raise hundreds of millions of dollars less than originally anticipated as lawmakers on the House tax committee consider the idea next week.
"I'm still confident that we're going to get there. It may take more pieces than we initially looked at. But we're still working," Robinson said in an interview with The Associated Press.
Edwards is pushing a tax overhaul that aims to end repeated budget gaps by more heavily taxing businesses. His tax package was intended to replace $1.3 billion in temporary taxes set to expire in mid-2018, while also raising another $400 million for next year's budget the governor wants to spend on the TOPS college tuition program, K-12 education and other items.
One of the biggest-ticket items is the gross receipts tax, with varying levels between types of businesses, their levels of gross receipts and considerations for how they file their taxes. Some companies would pay as little as $250 a year while others could pay thousands of dollars or more.
The official projection of what the tax would raise is being developed by the nonpartisan Legislative Fiscal Office, but using similar data that Robinson's department used.
No matter the estimate, the immediate hurdle involves winning support as the tax bill gets its first legislative hearing Monday in the House Ways and Means Committee. The proposal has little public support, and many lawmakers on both sides of the political aisle believe the bill is dead on arrival. House Republican leaders oppose the idea, and business groups have strongly criticized the concept.
Edwards said his tax plan is aimed at making sure businesses are paying "their fair share," and he cites data that 80 percent of corporate income tax filers in Louisiana didn't pay state income taxes in 2015.
Critics say the gross receipts tax would harm companies working on tight margins by not accounting for profit or expenses. They worry it could chase away business in a state with one of the nation's highest unemployment rates.
House Speaker Taylor Barras, a New Iberia Republican, said lawmakers in his chamber don't like the gross receipts tax concept.
"I am still hopeful that once legislators really delve into the issue that they'll see the Commercial Activity Tax is not as bad as it has been described," Robinson said.
– by AP Reporter Melinda Deslatte