HLS 20RS-799 ORIGINAL
2020 Regular Session
HOUSE CONCURRENT STUDY REQUEST NO. 2
BY REPRESENTATIVE BEAULLIEU
FUNDS/FUNDING: Requests the House Ways and Means and the Senate Revenue and
Fiscal Affairs Committees to study the feasibility of funding the ad valorem property
taxes levied on business inventories
1 A CONCURRENT STUDY REQUEST
2To the House Committee on Ways and Means and the Senate Committee on Revenue and
3 Fiscal Affairs to meet and to function as a joint committee to study the feasibility of
4 working with local governments to fund the amounts of ad valorem property taxes
5 levied on inventories and to report the findings of the joint committee to the
6 legislature prior to the convening of the 2021 Regular Session.
7 WHEREAS, Louisiana is one of a minority of states that do not exempt inventory
8from ad valorem tax, and, instead, local governments levy and collect ad valorem taxes on
9inventory, and the businesses paying this tax are reimbursed by the state for the amount of
10the tax paid via a partially refundable tax credit on their state income and corporate franchise
11tax returns; and
12 WHEREAS, in Fiscal Year 2017-2018, the state paid approximately $307.5 million
13in inventory tax credits, in Fiscal Year 2018-2019 the state paid approximately $285.7
14million in inventory tax credits, and in Fiscal Year 2019-2020, the state estimates it will pay
15approximately $290.5 million in inventory tax credits to taxpayers claiming this credit on
16tax returns; and
17 WHEREAS, payment of the tax credit from current tax collections results in a direct
18reduction of state general funds with no legislative appropriation, oversight, or evaluation
19as a spending priority by the legislature; and
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HCSR NO. 2
1 WHEREAS, neither exempting inventory from taxation nor eliminating the credit
2is a viable solution because exempting inventory from local property tax without an
3alternative revenue source would harm the ability of local governments that rely on these
4taxes to provide essential services; and
5 WHEREAS, eliminating the inventory tax credit without addressing the ad valorem
6tax that is required to be levied pursuant to the state constitution would subject businesses
7that pay this tax to an unsustainable tax burden and could significantly decrease Louisiana's
8competitiveness; and
9 WHEREAS, since the state is reimbursing taxpayers for the amount of local ad
10valorem taxes they are paying to local governments, the state should explore the alternative
11of working with local governments to fund the amounts of ad valorem property taxes levied
12on inventories in order to relieve the burden placed on taxpayers required to pay this
13property tax; and
14 WHEREAS, in order for this alternative proposition to be successful, the state should
15consider the timing of the payment of ad valorem property taxes to local governments, the
16amount of property taxes that are offset by taxpayer liability, the fact that the state's fiscal
17responsibility for the payment of the inventory tax credit increases each fiscal year, and the
18total cost of such an alternative proposition to the state budget each year; and
19 WHEREAS, in order to fully understand all of the issues that may arise related to this
20alternative funding proposal, the committees should include testimony and input from all
21stakeholders including but not limited to local government officials and assessors,
22representatives from businesses that are subject to inventory taxes, the Department of
23Revenue, the Division of Administration, and any other interested groups and parties.
24 THEREFORE, the Legislature of Louisiana requests the House Committee on Ways
25and Means and the Senate Committee on Revenue and Fiscal Affairs to meet and to function
26as a joint committee to study the feasibility of working with local governments to fund the
27amounts of ad valorem property taxes levied on inventories and to report the findings of the
28joint committee to the legislature prior to the convening of the 2021 Regular Session.
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HCSR NO. 2
DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
HCSR 2 Original 2020 Regular Session Beaullieu
Requests the House Committee on Ways and Means and the Senate Committee on Revenue
and Fiscal Affairs to meet and to function as a joint committee to study the feasibility of
working with local governments to fund the amounts of ad valorem property taxes levied on
inventories and to report the findings of the joint committee to the legislature prior to the
convening of the 2021 Regular Session.
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