Provides for the extent of the state sales and use tax exemption for business utilities (Items #9 and 36) (EG +$238,200,000 GF RV See Note)
Impact
The primary intention of HB 64 is to relieve businesses from the financial burden of state sales and use taxes on utilities they utilize. Under the proposed law, tax exemptions depend on fluctuating natural gas prices, whereby no exemption exists when prices are at or below $6 per million BTU. The amounts of the exemptions progressively increase as the price of natural gas rises, benefiting firms that utilize significant quantities of gas in their operations. This could significantly lower operational costs for manufacturers and industries heavily reliant on natural gas.
Summary
House Bill 64, introduced by Representative Montoucet, aims to modify the state's sales and use tax exemption concerning business utilities. The bill outlines specific conditions under which businesses can claim exemptions, particularly focusing on natural gas prices. By repealing several existing exclusions, the bill sets forth a framework for a tax exemption based on the market price of natural gas at Henry Hub. The bill was enacted to become effective as of April 1, 2016, indicating that it targets immediate impacts on business utility expenses for Louisiana companies.
Sentiment
The sentiment surrounding the bill appeared to be mixed, reflecting both support for enhancing business competitiveness and concern over potential revenue losses for the state. Proponents of HB 64 argued that these exemptions could stimulate economic growth by lowering overhead costs for businesses operating in Louisiana. On the contrary, opponents raised issues pertaining to state finances, fearing the revenue impact from these exemptions could strain public budgets, particularly in essential public services funded by sales tax revenue.
Contention
Notably, discussions around HB 64 highlighted the tension between providing economic incentives for local businesses and ensuring sufficient state revenue. Critics of the bill emphasized that without careful oversight, the exemptions might result in adverse effects on the state's ability to fund critical services. Additionally, there was concern about fairness, as some businesses might benefit disproportionately based on their energy consumption levels, leading to discussions on whether the tax structure adequately addresses all sectors equitably.
Provides for the extent of applicability of various exclusions and exemptions from state sales and use tax (Item #36) (EG +$789,900,000 GF RV See Note)
Repeals the state sales and use tax exclusion for manufacturing machinery and equipment and the exemption for business utilities and provides a refund of the state sales and use tax collected on certain manufacturing machinery and equipment and industrial utilities (OR INCREASE GF RV See Note)
Dedicates the avails of the existing one percent state sales and use tax to the Stability in Higher Education Fund and provides with respect to the extent of that tax base for purposes of monies available for deposit into the fund (Items #7 and 36) (EG SEE FISC NOTE GF RV See Note)
To establish a framework upon which to repeal the property tax on business inventories and offshore vessels as well as the state income tax credits associated therewith through the repeal of a state sales and use tax, the levy of a limited, temporary state sales and use tax, and limitations on the applicability of certain exclusions and exemptions from certain state sales and use taxes (Items #31 and 36) (OR SEE FISC NOTE GF RV)