Allain tax proposals await action by JBE

A series of changes to Louisiana’s tax system was passed by lawmakers in the 2023 regular session, though some measures are still awaiting the governor’s approval.

The governor signed into law several bills involving sales and income taxes but has not acted on other bills that could have a significant impact on taxpayers and revenue.

The biggest change comes from Senate Bill 1, sponsored by Rep. Bret Allain, R-Franklin, to phase out the state’s corporate income tax, levied on businesses’ net worth or accumulated wealth.

SB 1, sent to Edwards on June 7, would reduce the franchise tax by 25% per year if combined corporate income and franchise taxes exceed $600 million.

The bill was tied to the approval of Senate Bill 6, also by Allain, to reduce sales tax and project facilities rebates through the state’s Quality Jobs program by half of any reduction of the franchise tax rate.

Allain has said the expected $140 million in savings through SB 6, combined with changes to the corporate income tax three years ago that limited net operating losses, will more than cover the roughly $300 million generated by the franchise tax each year. Edwards has not signaled if or when he might sign the bill.

House Bill 562, by Speaker Clay Schexnayder, R-Gonzales, to extend Louisiana’s film tax credits is also pending before the governor.

Other major legislation, House Bill 558 by New Iberia Rep. Beau Beaullieu, will transfer responsibility over local sales tax collections from the Department of Revenue to the Uniform Local Sales Tax Board, which will begin work in January to create a centralized system for all of the state’s 54 taxing jurisdictions.

The bill, motivated in part by a lawsuit filed with the help of the Pelican Center to challenge the sales tax system, was signed by Edwards on June 14.

“The Legislature took important steps this session on tax reform by enacting a permanent phase out to the state’s punishing franchise tax and streamlining a convoluted sales tax collection system, both the subject of many years of debate across the state,” Dan Erspamer, CEO of the Pelican Institute, told The Center Square.

“The Pelican Center for Justice has been proud to represent Halstead Bead in a legal challenge to the sales tax system. We are gratified that their fight in court has helped put the problem in sharp enough relief that the Legislature has made these important changes. “

Edwards also approved SB 8, by Sen. Jay Leneau, D-Alexandria, to eliminate interest on disputed taxes; SB 89, by Sen. Jeremy Stine, to provide an exclusion for individual income tax for capital gains generated by the sale of certain businesses; and SB 428, by Rep. Thomas Pressly, R-Shreveport, dealing with income tax exclusions for certain businesses, estates, trusts and partnerships.

Senate Bill 5, by Allain, to provide alternatives in lieu of payment under protest for ad valorem taxes gained Edwards’ signature as well; as did HB 256, by Rep. Gregory Miller, R-Norco, to extend the deadline for local sales taxes when they fall on a holiday; and HB 171, by Beaullieu, to change the threshold at which online sellers are required to remit state and local sales taxes.

“There’s much more to be done, but the Legislature should be commended for continuing to pursue policies that will bring jobs and opportunity to our people and begin to write Louisiana’s comeback story,” Erspamer said.