Watercraft tax repeal considered; move would hit Lafourche hardest

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Proposed repeal of a watercraft tax on offshore vessels – currently under consideration by the Louisiana Legislature – would hit Lafourche the hardest of all parishes if passed.

The tax, which goes to parishes but then is refunded to vessel owners by the state, is a target of some legislators seeking to close a $1.6 billion budget gap.

Should the tax be repealed, Lafourche Parish would lose about $50 million in property tax revenue, which represents roughly 40 percent of all property taxes collected in the parish every year, officials said.

“If I took a quarter of your household budget away, how would you be affected,” Councilman Lindel Toups said when asked about the potential effect of a repeal. “Definitely, our services would decrease for the fact that we wouldn’t have the money to furnish them.”

Trash collection could get cut back to once a week, theoretically, said Councilman Phillip Gouaux. Roads, drainage and other vital functions, he said, will be affected.

The repeal of the watercraft tax, which is levied and collected by parish governments and municipalities once a year, would relieve the state from offering the tax credit to commercial boat operators, which reimburses them for 100 percent of the taxes paid.

Officially called the Ad Valorem Tax Credit for Offshore Vessels, the credit concerns txes levied primarily on vessels operating offshore.

No parish in Louisiana collects more than Lafourche in watercraft property taxes. Cameron Parish, which collected $5,492,344 in watercraft taxes last year, is the second-most dependent, relying on watercraft taxes for 14.8 percent of their property tax base.

But when it comes to filling a budget gap as big as this state faces, no longer having to pay the watercraft tax credit wouldn’t save Louisiana much money, a review of Louisiana Department of Revenue data by The Time shows.

Louisiana paid out $26,541,874 in 2012, according to the latest figures.

That amounted to less than two percent of all tax credits and exemptions the state paid corporations that year.

But what is a drop in the bucket for savings to the state would submerge Lafourche Parish in a sea of problems, local officials maintain.

This is why the Lafourche Parish Council passed a resolution opposing the repeal or reduction of the watercraft tax.

Parish officials say they are counting on local legislators to help sink the bill.

“I don’t know how much good we can do without our delegation behind it,” said Councilman Aaron Caillouet. He remains hopeful, however.

Some local state legislators are not alarmed. They say the Legislature would never vote to repeal the tax.

Rep. Joe Harrison, R-Napoleonville, said that he has spoken with many fellow lawmakers who are opposed to repeal.

“This would undermine the revenue sources of a number of parishes without any replacement revenue,” Harrison said.

According to David DeLoach, chairman of the Louisiana Association of Waterway Operators and Shipyards, it is only the credit and not the tax itself that state legislators are considering throwing overboard.

“So, basically the ad valorem tax system in the state is built on the state paying for those ad valorem taxes,” Deloach said. “And so that’s going to be a $43 million burden that the companies are going to have to incur that they haven’t had in the past. That’s a lot of money that those guys are going to have to pay.”

He said that since the tax is levied on vessels that home-port in the parishes that charge the tax, many ship-owners will likely move to another state.

“I don’t think it will pass the House or the Senate,” said Councilman Jerry LaFont. “I think anybody that does that, it would kind of be a shot in the foot for any political career, I would think, because the hit that it’s gonna hit on the boat companies is going to be crazy.”

Owners of commercial vessels like this may suffer a greater tax burden should the watercraft tax credit be repealed. The repeal is among issues the Louisiana Legislature is considering this session.