Louisiana Senate Bill SB2

Louisiana 2016 1st Special Session

• Introduced: 2/15/16
• Refer: 2/15/16

Caption

Provides for the reduction of the amount of certain ad valorem tax credits and for carryforward rather than the refund of certain portion of excess credit amount. (gov sig) (OR +$294,000,000 GF RV See Note)

Impact

The proposed law primarily restructures financial incentives for businesses, particularly manufacturers and telephone companies, by modifying existing tax credits. The changes could potentially yield an increase in state revenue while redistributing financial responsibilities among various entities that previously benefitted from higher credit percentages. Critics argue that this reduction might disincentivize investments in the state by impacting cash flow for companies that rely on these credits to offset operational costs.

Summary

Senate Bill 2 (SB2) aims to revise the current framework for ad valorem tax credits associated with inventory taxes, offshore vessels, and public service properties. Specifically, the bill introduces reductions in the percentage of tax credits available, moving from a full 100% down to 80% for certain taxes paid. This legislative action is positioned within the larger context of tax reform aimed at stabilizing or even enhancing the financial landscape of the state, especially in relation to local government revenue streams affected by these credits.

Sentiment

The sentiment surrounding SB2 appears mixed among stakeholders. Proponents argue that reducing the credits is a step towards responsible fiscal management that can enhance state revenue and reduce budgetary pressures. Conversely, opponents express concern that these changes could lead to a perceived inhospitable business environment and could adversely affect the competitiveness of Louisiana businesses, which may struggle to absorb the increased tax burdens.

Contention

Key points of contention include the balance between necessary state revenue and potentially stifling economic growth, as well as the implications for local governments dependent on ad valorem tax revenues. Critics of the bill emphasize the importance of maintaining higher tax credits to foster business growth and investment. Additionally, the distinction of whom the tax credits are applied to—specifically which sectors—remains a focal point of debate, with particular attention on how this will affect telephone companies and the overall service effectiveness.