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Taxation and Finance.
LABI will actively work for the enactment of fiscal policies that promote a stronger state economy, with a focus on private sector job creation. Businesses in Louisiana pay a disproportionate share of the tax burden as compared with other states. Added to this are the administrative headaches and their costs that confront and frustrate Louisiana employers attempting to comply with state and local tax laws and their requirements. This places our state at a significant disadvantage when competing for business investment and the jobs it creates. This year’s legislative session will be non-fiscal, which limits the kind of tax legislation that may be introduced. Nevertheless, LABI will, to the extent possible, promote constructive reforms that ensure our state’s economic development while securing sufficient revenues for appropriate government services at both the state and local levels.
Major Issues.
Jobs and Economic Development
LABI Position: Restore advances in economic development by supporting measures that encourage industrial and business investment, and that create and retain jobs in our state, including those that limit or reverse expansion of the business tax burden. Support the availability of fair and equitable tax incentives for economic development, including those for job retention, job creation, and facility modernization. Support business tax measures that encourage the retention or relocation of jobs and businesses to this state. Oppose efforts to weaken Louisiana’s existing economic development incentives. Support elimination of the tax penalties resulting from having a commercial domicile in the state of Louisiana. Continue to educate the public, the media and public officials regarding: (a) Louisiana’s tax structure, (b) the imbalance in the tax burden borne by business, (c) the benefits of a competitive, properly balanced and predictable tax system, and (d) needed fiscal and spending reform.
Budget Reform
LABI Position: Support long-term reforms to the structure of the state budget that require government to annually review all spending, prioritize services and rein in budget growth. Support changes to restore voter confidence in state government, including:
• Managing budget deficits without new or increased taxes or fees, including long-term reform of costly government programs;
• Gradually shifting the primary responsibility of funding local services to local governments;
• Operating state government in a more efficient, cost-effective and fiscally responsible manner, including privatizing state government services where feasible; and
• Achieving cost savings through the elimination or consolidation of programs and/or agencies that would not have a detrimental impact on the delivery of needed services.
Industrial Tax Exemption
LABI Position: Pursue efforts to ensure a competitive and viable industrial property tax exemption program, including opposing efforts to tie the exemption to considerations not directly related to industrial development. Support establishment of a “one-stop shop,” either at the state or local level, for handling applications for the industrial property tax exemption.
Current Issues.
Business Tax Burden: Support a competitive business tax environment for Louisiana’s industries that are subject to substantial interstate competition. Oppose the imposition or increase of any taxes or fees that would expand the imbalance in the tax/economic burden borne by business in Louisiana. Oppose legislation and tax policies that would increase the tax compliance burden on business, including expanding requirements for withholding at the source.
Sunsetting Exemptions: Support the continuation of the statutory business tax incentives, exemptions and exclusions as they are scheduled to expire.
Tax Administration: Support measures to eliminate abuse of authority by state and local tax collectors. Support measures restricting the imposition on taxpayers of attorney fees and audit costs of state and local governments in tax cases. Support measures that would prohibit state and local governmental agencies and taxing authorities from entering into contingency fee or other contracts with, or from employing outside counsel, auditors, or consultants to be paid by the taxpayer or whose compensation is dependent on the outcome of the audit, award, or settlement in tax cases. Support legislation to limit the use of summary procedure, and to provide standards to correct assessments that are based on error of fact or law. Oppose state tax administration that employs audit methodologies relying upon faulty assumptions and premises that tend to result in unrealistic, over-reaching, and substantial additional tax assessments.
Comptroller Office: Support the creation of a Comptroller Division to oversee the functions of the state’s fiscal agencies.
Tax Elections: Support a reduction in the excessive number of local tax election dates to afford taxpayers a reasonable opportunity to evaluate the merits of tax proposals.
Vote Requirement for Tax Relief: Oppose restrictions on the ability of the Legislature to lower taxes or grant tax relief.
Income Taxation
Business Activity Tax: Oppose legislation that would impose additional or new taxes on business through a business activity, gross receipts, value-added, or any other similar taxing scheme, thus decreasing Louisiana’s ability to attract and retain jobs and investment.
Franchise Tax: Support the elimination of the corporate franchise tax. Protect the exclusion of long-term debt from the corporate franchise tax base.
Unitary Reporting (): Oppose efforts to impose mandatory unitary reporting for corporate income tax purposes, as the imposition of this reporting method would have a detrimental impact on economic development in the state.
Net Operating Losses: Support full restoration and utilization of the net operating loss deduction. Oppose any further weakening of this deduction.
Property Taxation
Inventory Tax Credit: Support repeal of the local inventory tax with a gradual transition to offset the loss of this revenue stream until a local mechanism is established for the replacement of such state funding. Oppose efforts to repeal or restrict the inventory tax credit program so long as the local inventory tax exists.
Property Tax Assessments: Support legislation to promote uniformity and to simplify the procedures for property owners contesting their property tax assessments. Oppose efforts to undermine the Louisiana Tax Commission’s constitutional authority to oversee assessments, including change orders, omitted property assessments and supplemental assessments. Support legislation to clarify existing law concerning assessment procedures, including change orders, omitted property assessments and supplemental assessments. Support appropriate and necessary reforms to the property tax system. Support legislation and changes in the Louisiana Tax Commission rules and regulations to improve the accuracy and fairness of the methods and procedures used in the assessment and valuation process. Oppose efforts by assessors to tax component parts of motor vehicles. Support the current use value system for determining the assessed value of property that is classified as agriculture, timberlands, horticulture and marshlands.
Property Tax Millages: Support legislation to limit or restrict the rolling forward of property tax millages following a mandatory millage roll-back.
Property Tax/Homestead Exemption: Oppose measures to increase the homestead exemption, which would further shift the property tax burden to business. Louisiana businesses continue to pay a disproportionate share of the tax burden as compared with other states.
Sales and Use Taxation
Exclusions: Protect the distinction between sales and use tax exemptions and exclusions.
Manufacturing Taxation: Protect the historic interpretation of the sales and use tax exclusion for raw materials purchased for further processing. Support the exclusion from sales and use tax of all property associated with the manufacturing of property for sale, including all utilities, raw materials, catalysts, process chemicals, and other consumable items. Oppose legislation and tax policies that would result in the taxation of by-products and/or intermediate materials for sales and use tax purposes.
Manufacturing Machinery and Equipment: Oppose any elimination or reduction of the state sales, use, and rental tax exclusion for manufacturing machinery and equipment, and encourage the exclusion at the local level. Oppose efforts to restrict the application of the manufacturing machinery and equipment sales tax exclusion for repairs, maintenance and refurbishment of machinery and equipment, including tangible personal property used in the repair, maintenance and refurbishment of machinery and equipment.
Statewide Centralized Collection: Support measures to promote consistency in the administration of the state and local sales tax systems, including measures to promote statewide centralized collection and administration of local sales taxes.
Sales Taxes: Oppose measures to levy or authorize additional statewide sales taxes, or to levy or authorize local sales taxes without voter approval. Support legislation that affirms the longstanding practice that certain articles of tangible personal property, which are delivered into a local taxing jurisdiction but earmarked for ultimate use in another jurisdiction, be subject to local sales and/or use tax only in the jurisdiction where the goods are ultimately used.
Sales Tax on Repairs: Support the elimination of local sales and use tax on repairs to property that will be shipped out of state. Oppose efforts to expand local sales and use tax to labor used in repairs. Support elimination of state and local sales and use tax for repairs and services performed out of state.
Direct Pay Permits: Support measures to expand the availability of sales and use tax direct pay permits at state and local levels to all businesses.
Recodification of Provisions: Support legislation to reorganize and recodify the state and local sales and use tax statutes to make them more understandable to taxpayers, while ensuring that no changes are made that would worsen Louisiana’s already challenging business tax climate.
Natural Resources Taxation
Energy Taxation: Protect and maintain the state sales tax exemptions for natural gas, electricity, water, steam, and other energy sources, and oppose any attempts to impose the sales tax on these or any other energy sources. Support legislation which will clarify the definition of “energy sources” to assure that all are excluded from state sales and use tax.
Oil and Gas Taxation: Oil and gas production and processing are critical to Louisiana’s economy, and LABI will:
• Oppose the imposition of any oil and gas taxes and fees, including but not limited to an oil and gas processing tax, a hydrocarbon transportation or refinery tax or fee on minerals, a first-use tax, or a coastal wetlands environmental levy;
• Oppose legislation and tax policies that would undermine the current protection of oil, gas and associated mineral rights from the imposition of property and other taxes;
• Support legislation and tax policies that affirm the historic treatment of natural gas used at the lease and at gas processing plants as not subject to sales and use tax; and• Support legislation and tax policies that establish appropriate appraisal methodologies for determining the fair market value of all property subject to property tax, including taxable subsurface oil and gas equipment.
Salt Cavern Assessments: Oppose efforts by assessors to assess salt caverns until uniform valid valuation methodologies are adopted by the Louisiana Tax Commission. Oppose efforts by assessors to assess salt caverns as other than land.
Budgetary Issues
Special Funds: Oppose raiding of legislatively dedicated funds that were created and are funded by industry fees paid to accomplish specific regulatory and other purposes. Industry fees for regulatory services or other purposes should not be diverted to support the general operations of state government. If self-generated revenues exceed the cost of a regulatory or other program, the Legislature should reduce the fees accordingly and/or reduce the scale of such regulatory or other program.
Constitutionally Dedicated Expenditures: Oppose efforts to redirect trust fund dollars generated by fees from industry to expenses other than those to which they are constitutionally dedicated.
Expenditure Limit: Lower the limit on state government spending to relate to the current budget. Continue to support a reasonable formula for the determination of the expenditure limit. Once an expenditure limit has been established for any fiscal year, oppose efforts by the Legislature to increase that limit, unless such increase is appropriating monies from the constitutionally restricted surplus, and the instrument for appropriating such surplus clearly states that the temporary increase in the spending cap will not affect the computation of the expenditure limit for the following fiscal year.
Ongoing Policy.
Fiscal Transparency: Support efforts to increase the transparency of state and local government operations and enhance public online access to information.
Budget Stabilization Fund: Maintain and protect the concept and integrity of the fund, and the current constitutional restrictions on distributions from the fund. Oppose efforts to use the fund as security or collateral for increasing state debt.
Taxpayer Protection and Fairness: Protect and maintain enactments addressing taxpayer protection and fairness issues relative to local sales tax contract auditors, attorney’s fees charged by tax collectors, and arbitrary local sales tax assessments. Oppose any retroactive state and local legislation.
Inheritance Tax and Gift Taxes: Protect and maintain the repeal of the inheritance tax and gift tax.
Refund Procedures: Support taxpayers’ fundamental right to a prompt refund of taxes not due to a taxing authority.
“Fiscal Only” Legislative Sessions: Support the continuation of a system of alternating fiscal/non-fiscal legislative sessions.
Statewide Taxing Districts: Oppose measures to create a statewide taxing district, whose boundaries are coterminous with the state, which has the authority to levy sales, use, or any similar tax for any purpose.
Fees for Services: Support legislation codifying present jurisprudence, which provides that the imposition or assessment of charges or fees, by or for the benefit of the state or any board, department, or agency of the state, should not either: (1) have raising revenue as its primary purpose, or (2) clearly and materially exceed the cost of regulation or conferring special benefits upon those assessed (Audubon Insurance, et al v. Bernard, et al) (La. 1983).
Advance Collection of Sales Tax: Protect and maintain the elimination of the advance sales tax collection program.
Mineral Property Taxes: Support legislation and/or regulations that will establish the fair market value for oil, natural gas, and oil and natural gas equipment for taxation purposes.
Property Tax – Public Service Property: Support a reduction in the ad valorem tax on property acquired by public service entities after deregulation of those companies has been implemented. Any revised system of public service property taxation should not result in a shifting of the property tax burden from regulated to non-regulated businesses.
Retirement Systems: Support consolidation and reform of state retirement systems, including elimination of early retirement after 20 years of service regardless of age for future state employees. Oppose any expansion of benefits or coverage to help ensure fiscally responsible funding and actuarial soundness of Louisiana’s public retirement systems. Support legislation that would raise the retirement age and/or increase the years of service needed for new state employees to retire. Support the use of surplus funds to pay down the unfunded accrued liability of the state retirement systems.
Hazardous Waste Tax: Oppose new or increased taxes on the generation, transportation, storage, disposal, incineration, recycling, injection or treatment of hazardous waste or any permitted emission.
Annexation: Support legislation to require municipalities to notify affected property owners before annexing any property.
Highway and Infrastructure Funding: Support the use of objective criteria, including fostering economic development, to prioritize funding for state highway construction projects. Oppose allowing the Legislature to add or substitute projects in the final construction program. Oppose repeal of any provisions of Act 486 of 2021.
Prevailing Wage: Oppose any attempts by the Legislature to re-enact a prevailing wage law, which would result in the state or local governments – and by extension, taxpayers – paying more for goods and services than is paid by businesses in the private sector.
Contacts.
Jim Patterson serves as Director of the Taxation and Finance Council. In this capacity, his responsibilities include tax and fiscal matters that impact Louisiana’s businesses and economic development.
Jim Patterson
Director, Taxation and Finance Council, LABI
(225) 215-6657
jimp@labi.org
Jason DeCuir
Chair, Taxation and Finance Council
Advantous Consulting, LLC
jason.decuir@advantous.com
