BATON ROUGE, La. (AP) – Talk of “tax reform” has returned to the Louisiana Capitol, with the House and Senate’s Republican leaders making it their central push for the two-month legislative session starting Monday. But reform means different things to different people, and reaching a deal is tricky at best.
Louisiana’s majority-Republican Legislature and Democratic Gov. John Bel Edwards were mired in tax debates most of the last four-year term, to fill massive budget gaps left behind by former Gov. Bobby Jindal. Eventually, they reached a patchwork deal to keep the state’s budget afloat without deep slashing, balanced mainly on a temporary state sales tax hike.
That deal fell far short of the long-term tax overhaul that good government groups, tax experts and economists suggest is needed to simplify Louisiana’s exemption-riddled set of tax laws. Reams of studies point out the problems.
A new term began in 2020, with new lawmakers, new GOP legislative leaders in House Speaker Clay Schexnayder and Senate President Page Cortez and new tax committee chairmen. They want to revisit the debate, with a focus on business.
“Louisiana has a per capita state and local tax burden that is very competitive. But, because of the complexity of the current tax structure, we are ranked near the bottom by many tax policy organizations,” Cortez, Schexnayder and six other Republican legislative leaders said in a joint statement outlining the effort. “Businesses pay attention to these rankings.”
At least this time, lawmakers aren’t trying to rewrite the tax structure in the middle of a budget crisis. Whether that’s a help or impediment isn’t clear. Sometimes Louisiana lawmakers only embrace sweeping change if their hands are forced by looming disaster.
There’s a mid-2025 expiration of the temporary sales tax, which could help drive the discussion, but it’s not an imminent problem.
Edwards said he’d support a tax overhaul if the package remains “revenue neutral” – where the state treasury doesn’t lose the current level of money used to pay for state services.
“What I am not going to do as governor is create that structural deficit that I inherited again. We have worked too hard and made too much progress. I am not going backwards on that,” he said.
Sen. Bret Allain, the Franklin Republican who chairs the Senate tax committee, agrees. He’s said the goal isn’t to lower the tax collections the state receives, but to make the tax laws simpler, fairer and more attractive to business.
Striking agreement on bills that need two-thirds support in the House and Senate will be tough. Lawmakers will face competing interests and would have to pick winners and losers. What benefits one business can harm another. What helps some households can boost the tax bill of others.
The top priority for the powerful Louisiana Association of Business and Industry – and Schexnayder – is a push to centralize sales tax collections in the state, rather than allowing local elected officials to oversee the work.
Supporters of the centralization call Louisiana’s fragmented approach confusing and overly cumbersome to businesses. Some local government officials are certain to oppose efforts to strip their authority.
Other proposals pushed by Republican leaders would lower personal and corporate income tax rates in exchange for eliminating Louisiana’s current tax deduction for federal income taxes paid. They also want to cut the corporate franchise tax and find a way to phase-out the local property taxes charged on business inventory. Exactly how they would offset lost revenue isn’t clear.
Republican Sen. Cameron Henry of Jefferson Parish is waiting for more details.
“I would imagine we would either meet in groups or receive something from leadership about what the plan looks like, how they affect the businesses and people in our districts. I’m hoping to get that relatively soon,” he said.
Baton Rouge Rep. Ted James, a Democrat who leads the Legislative Black Caucus, said the centralized sales tax proposal could win final passage. But he’s skeptical any other big tax measures will emerge from the session.
“I know that we have these tax reform conversations. We’ve done that before, and they haven’t been successful,” James said. “I don’t expect anything different.”
In a podcast with the Louisiana Association of Business and Industry, Allain acknowledged the difficulty of gaining passage: “You’re talking about moving mountains that have been in place in this state for 30 and 40 years, but I think we’ll be a better state taxwise.”
EDITOR’S NOTE: Melinda Deslatte has covered Louisiana politics for The Associated Press since 2000. Follow her at http://twitter.com/melindadeslatte.
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