Last Modified: Wednesday, March 02, 2016 12:34 PM
BATON ROUGE -- A Senate resolution aimed at finding a solution to ending local inventory taxes that cost the state $460 million last year cleared the Revenue and Fiscal Affairs Committee on Tuesday. The committee also approved a moratorium on rebates taxpayers get for assessments paid to the state-backed insurance company.
Both measures move to the full Senate.
Sen. Bret Allain, R-Franklin, is sponsor of Senate Concurrent Resolution 6, which would create a task force to study the inventory taxes that are offset with state tax credits.
Allain had a bill that would have reformed the inventory tax but withdrew it in the face of opposition from local government officials, who said they depend on the tax for their operations.
“We can no longer afford to ignore this credit,” Allain said at an earlier committee meeting. “It will grow and it will be the biggest driver of the budgets into the future.”
The proposed task force would be composed of 21 members, including legislators, industry representatives, a public interest representative, a faculty member with revenue forecasting experience serving on the Revenue Estimating Conference, and the legislative auditor.
The bill was amended to include a representative from the Louisiana AFL-CIO. Sen. Eddie Lambert, R-Gonzales, also added an amendment to broaden the resolution to include the study of the total corporate tax structure and tax rebates, credits and exclusions.
The task force would meet monthly if there is business to transact, starting July 31. It would report its findings and recommendations to the president of the Senate and the speaker of the House no later than Feb. 1, 2017.
Allain had proposed to replace the inventory tax with a fund that would contain either $500 million each year, or 15.6 percent of annual sales tax receipts, whichever is less.
Sheriff Sid Gautreaux of East Baton Rouge Parish told the committee, “Some of these sheriffs could not survive this, especially in smaller communities. Let’s not rush into something. Let’s consider alternatives.”
The Public Affairs Research Council of Louisiana in its “PAR Guide to the State Budget Crisis” said inventory assessments have increased from $2 billion in 2004 to $4.4 billion in 2014.
PAR’s report noted that the Tax Foundation said Louisiana and 12 other states allow a business inventory tax either fully or partially. It is called an antiquated property tax that lowers states’ rankings for business competitiveness, the agency said.
Government agencies in East Baton Rouge Parish that levy property taxes received a share of the $45.5 million raised from the inventory tax in 2014, the highest in the state. St. John Parish agencies received $22.4 million, which is 42.5 percent of their total tax dollars.
A number of government agencies in Calcasieu Parish that levy property taxes received part of the $27 million raised from the tax. Cameron agencies shared $3 million; Beauregard agencies, $2.1 million; Jeff Davis agencies, $1.2 million; and Allen and Vernon agencies, $1 million each.
It is believed a constitutional amendment would be required to eliminate the tax.
Senate Bill 5, by Sen. Eric LaFleur, D-Ville Platte, would put a two-year moratorium on rebates that taxpayers get on their state income tax forms for payments they make to Louisiana Citizens Property Insurance Corp. It is expected to raise $32.4 million in 2016-17 and 15.5 million in 2017-18. The rebates would be available again starting on Jan. 1, 2018.
Citizens is the state-backed insurance company providing coverage to residents who can’t get coverage on the open market.
The Legislature in 2006 authorized the credit for the assessments levied on home and property insurance policies. The payments stemmed from borrowing made necessary because of losses during Hurricanes Katrina and Rita that cost the company $1.2 billion.
The state Insurance Department last year said $195 million, or 62 percent of the funds available from 2011 through 2015, remained unclaimed. The average rebate for personal and commercial property claims is about $113, the department said.
Rebates were available earlier this year for assessments paid as far back as 2012.