Louisiana House Bill HB434

Louisiana 2015 Regular Session

• Introduced: 4/2/15
• Refer: 4/2/15
• Refer: 4/13/15

Caption

Suspends a certain portion of the sales and use tax exemption for nonresidential utilities (OR +$209,100,000 GF RV See Note)

Impact

The immediate impact of HB 434 is the imposition of state sales taxes on nonresidential utilities, which could have significant implications for businesses relying on these essential services. The removal of the exemption on such vital utilities may increase operational costs for nonresidential entities, potentially leading to increased prices for consumers. The bill is projected to improve the state’s general fund revenue by approximately $209 million, making this legislation a financial consideration for economic stability in Louisiana.

Summary

House Bill 434, introduced by Representative James, aims to suspend a portion of the sales and use tax exemption for nonresidential utilities in Louisiana. As of July 1, 2015, the exemptions for sales of steam, water, electric power, and natural gas will become inapplicable, resulting in the imposition of state sales tax on these essentials. This law amends the current tax framework by removing previously exempt items from the tax base, potentially generating additional state revenue.

Sentiment

The sentiment around HB 434 is expected to be mixed, reflecting the broader tensions between fiscal responsibility and the economic burden placed on businesses. Proponents argue that eliminating the exemptions is necessary for enhancing state revenues and improving public finances, while opponents might express concerns over the additional financial burden on businesses, which could be passed on to consumers. The bill fosters discussions about the balance between state revenue generation and the costs incurred by local businesses.

Contention

Notable points of contention include the potential economic impact on businesses that depend on utilities. Critics of the bill worry that the tax increase could lead to higher service costs, thereby affecting the competitiveness of businesses in Louisiana. Supporters, on the other hand, emphasize the importance of adjusting the tax structure to ensure equitable contributions to state funding while arguing that nonresidential utilities are not unduly impacted as they can often bear additional costs better than smaller enterprises.