Legislation to end some tax credits advances
BATON ROUGE — Senate legislation aimed at setting end dates for 16 state tax credits emerged from the House Ways and Means Committee on Tuesday, but one major credit would be eliminated.
Senate Bill 172, by Sen. J.P. Morrell, D-New Orleans, heads to the House floor. Morrell wanted to end the local inventory tax credit, which cost the state $225.6 million in 2015-16, but Rep. Barry Ivey, R-Baton Rouge, succeeded in amending out the inventory tax credit.
Local governments levy inventory taxes, but businesses that pay it receive most of the money back via state rebates.
Morrell wanted to end 11 tax credits on Jan. 1, 2020, and five on Jan. 1, 2022. The inventory tax credit was among the last five. He said the fact that end dates are set doesn’t mean the tax credits might be eliminated, but that their effectiveness would at the least be reviewed.
“No one budges on the inventory tax. If you don’t force the issue, they never will,” Morrell said. “We almost always renew something. Put it up for review.”
Jim Patterson with the Louisiana Association of Business and Industry spoke against the bill before the inventory tax was eliminated from the list. He said it doesn’t eliminate the tax that businesses and industries have to pay.
A fiscal note said Morrell’s bill would raise $51 million in fiscal year 2020-21 and $277 million annually in 2021-22. Removing the inventory tax from review reduces the expected 2021-22 revenues considerably.
Sen. Dan “Blade” Morrish, R-Jennings, got a favorable vote on his S.B. 95, which goes to the full House. It would change a 95 percent education tuition tax credit to a nonrefundable tax credit. A number of private school spokesmen opposed the legislation.
Morrish said 16 other states have student tuition organizations and that all of them only offer nonrefundable tax credits. He said the legislation will encourage more people to participate in the program. The Senate approved the bill 22-10.
Gene Mills with the Louisiana Family Forum was one of the opponents. He said 1,692 students benefit from the program and are relieved of having to pay nearly $954,000 in tuition. A Lafayette businessman said it would take him more than a year to take advantage of the nonrefundable tax credit.
The committee also sent S.B. 79, by Sen. Jay Luneau, D-Alexandria, to the full House. It would establish a three-year, 28 percent reduction of 36 corporate income and franchise taxes effective through June 30, 2018. It would raise $12.5 million in 2018-19 and annually thereafter.
S.B. 25, by Morrell, goes to the full House. It would eliminate an $18 education tax credit that would raise $9.2 million in 2017-18 and $12.8 million in the following year. Morrell said the tax credit is underused. A similar House measure was earlier defeated by the full House.
Louisiana Economic Development tax credits would be eliminated by S.B. 183, also by Morrell. He said they are underused credits that would save $10.4 million in 2019-20, $22.2 million in 2020-21 and $25 million in 2021-2022.
S.B. 178, by Morrell, would end underused state Department of Economic Development tax credits and incentive programs. Both measures were reported favorably and go to the full House.
Two other bills by Morrell were also sent to the full House. They would renew a tax-free shopping program for international travelers and a credit on medical devices.