What’s the ultimate financial goal?
April 7, 2015
Robert Trahan
April 11, 2015
Proposals to repeal Louisiana’s inventory tax and vessel taxes – both seen as important income sources for local governments – were denounced Monday night by the Terrebonne Parish Council, which passed a resolution opposing legislation that would repeal them to help plug the state’s budget deficit hole.
The resolution, parish officials said, is a preemptive strike against bills filed by Sen. Robert Adley R-Benton, which would have voters decide on a constitutional amendment that would eliminate those taxes.
“So we’re not telling the state legislature how you manage your budget and how you collect your revenues,” Terrebonne Parish Manager Al Levron said. “What the resolution is saying [is], ‘whatever you do, don’t come take our money.;”
The inventory tax is levied on a business’ goods being held for sale, and collected annually, early in the year, with property taxes. The inventory tax is collected by local governments and used to pay for police, fire departments and recreation departments, as well as other services.
After businesses have paid the local tax, companies can then apply for a state tax credit that reimburses them.
Last year, Terrebonne Parish collected $10.5 million in inventory taxes, representing 12.17 percent of all taxes collected by the parish. Lafourche Parish collected $6 million in inventory taxes, representing 4.91 percent of all taxes the parish collects, according to records from both parish’s tax assessors.
There was a total of $456,623,499 collected in inventory taxes state-wide.
Adley said that Louisiana collects about $8 billion a year in total revenue, but the total potential tax that could be collected is $15 billion. The reason, Adley says, is because Louisiana offers about $7 billion in tax exemptions and credits. Five billion dollars of those exemptions and credits, Adley said, go to pay for local governments.
The vessel tax is levied against commercial boats and ships in Louisiana, and tax credits are also available for owners through state government. Immediate dollar figures on the vessel tax were not immediately available.
Adley has introduced a number of bills for the upcoming legislative session with the aim of closing the budget gap through tax reform. Another bill he’s proposed would leave the inventory tax in place, just repeal the credit offered by the state.
“The biggest part is the inventory tax repeal of the tax or the credit,” Sen. Adley said. “Try to repeal the credit, you’ve got all the business interests lobbying against it, whether or not you can pass that, I don’t know. The other side of the coin is inventory tax repeal, but then it leaves a hole in local government and so how you fill that hole becomes a big part of the debate. And I think there are ways to fill the hole, but everybody’s going to have to get some skin in this game because we cannot afford to keep giving $5 billion to local government and $7 billion over here to business and run our universities and our hospitals and build our roads.”
But keeping the tax and eliminating the tax credit would hurt local business owners, according to their advocates.
“That would result in a pretty substantial tax increase for Louisiana employers” and make us “not as competitive as a state,” said Jane Arnette, executive director of the South Central Industrial Association in Houma.
“It is my understanding; the inventory tax credit was established as an incentive to keep business here in Louisiana,” said Wendy Thibodeaux, Lafourche Parish assessor in an email. “I believe all companies would suffer without that credit in place and yes, there is the possibility that businesses may leave.”
The inventory tax credit, the second largest of all exemptions and credits offered to corporations in Louisiana, totaled $441,097,424 in the 2013-2014 fiscal year.
Governor Bobby Jindal had proposed changing the inventory tax credit from a refundable tax credit to a nonrefundable tax credit, but getting rid of the tax altogether is something that his administration agrees with.
“We agree that the inventory tax is a burdensome tax that should be eliminated and we will support any efforts to eliminate it,” said Shannon Bates Dirmann, spokesperson for the governor’s office. “The budget includes a clear path for protecting both healthcare and higher education.”
