Louisiana House Bill HB68

Louisiana 2016 1st Special Session

• Introduced: 2/17/16

Caption

(Constitutional Amendment) Authorizes the levy of a tax on the use of hydrocarbon processing facilities

Impact

The passage of HB 68 would result in a notable shift in state taxation policy concerning hydrocarbon resources. By allowing a levy on hydrocarbon processing facilities, the bill looks to streamline taxation within this sector instead of relying on the traditional severance tax model. The implication is that revenues could be generated from facilities that process hydrocarbons instead of merely taxing them upon extraction. It is expected that this could respond more effectively to current economic conditions and potentially stimulate investment in hydrocarbon processing infrastructure throughout Louisiana.

Summary

House Bill 68 seeks to amend the Louisiana Constitution to authorize the levy of a use tax specifically on hydrocarbon processing facilities. This proposed measure aims to implement a tax rate not exceeding 3% on the value of hydrocarbons utilized within these facilities. Simultaneously, the bill proposes a repeal of severance taxes that would traditionally apply to oil and gas if the new use tax is enacted and deemed valid under state law. This change is significant as it modifies existing statutes that restrict additional forms of taxation on natural resources within the state.

Sentiment

Overall sentiment surrounding HB 68 appears to vary, with supporters emphasizing the need for updated taxation frameworks that reflect modern practices in resource processing. Proponents argue that the new tax structure would provide a more sustainable income source for the state, while critics may contend that shifting from severance taxes to a use tax could create complexities or loopholes that challenge equitable taxation of the industry. The bill appears to navigate a balance between fostering economic growth and ensuring fair taxation practices.

Contention

The discussions around HB 68 highlight concerns regarding local government implications, as it explicitly prohibits political subdivisions from levying their own taxes on the use of hydrocarbon processing facilities. This measure has raised questions about local autonomy and whether it undermines the abilities of local governments to generate revenue from the industries operating within their jurisdictions. Proponents of the bill argue that a unified state-level approach is necessary for clarity and efficiency in taxation, while opponents fear that such restrictions may dilute local economic support and capabilities.