Louisiana House Bill HB509

Louisiana 2015 Regular Session

• Introduced: 4/3/15
• Refer: 4/3/15
• Refer: 4/13/15
• Report Pass: 5/5/15

Caption

Suspends the state sales and use tax exemption for business utilities (EG +$103,000,000 GF RV See Note)

Impact

The proposed changes in HB 509 would significantly impact businesses that rely on these utilities for their operations. By imposing a sales tax where there previously was none, advocates argue this could lead to an increase in state revenue, estimated at a total of $103 million over the suspension period. However, this may also raise the operational costs for businesses, particularly those heavily reliant on such utilities, potentially affecting their profitability and operational decisions.

Summary

House Bill 509 aims to suspend the state sales and use tax exemption for business utilities, specifically targeting the .97% levy on sales of steam, water, electric power, and natural gas. This suspension is set to be in effect for a two-year period, from July 1, 2015, to June 30, 2017. By rendering the existing exemptions inapplicable, inoperable, and of no effect, the bill aims to generate additional state revenue by expanding the base of taxable items in this category.

Sentiment

The sentiment surrounding HB 509 reflects a mix of support and concern among legislators and business communities. Supporters highlight the necessity of the revenue increase, particularly during budget shortfalls, arguing this could help fund essential services. Conversely, opponents express concern that adding taxes to business utilities could harm economic growth and discourage investment in Louisiana, particularly among small businesses struggling to absorb additional costs.

Contention

Notable points of contention include fears from the business sector about the burden of added taxes impacting competitiveness, particularly in relation to neighboring states that may not impose similar taxes. Additionally, the bill has faced scrutiny about its timing and effectiveness in addressing revenue needs without stifling economic development. The debate pits fiscal needs of the state against the operational realities of businesses operating under tight margins.