Louisiana House Bill HB43

Louisiana 2021 Regular Session

• Introduced: 3/1/21
• Refer: 3/2/21
• Refer: 4/12/21

Caption

Exempts certain business utilities from state sales and use taxes (OR -$69,200,000 GF RV See Note)

Impact

If enacted, HB 43 would significantly impact fiscal policies regarding taxation on utilities used in manufacturing. The exemption is expected to save manufacturers around $69.2 million in state revenue over the specified period. This change could alter the competitive landscape for manufacturing firms in Louisiana, potentially attracting more businesses to the state or encouraging the expansion of existing operations, thereby fostering an environment conducive to industrial growth.

Summary

House Bill 43 proposes an exemption from the state sales and use tax for certain business utilities, specifically steam, water, electric power, and natural gas used directly in the manufacturing process. The bill aims to alleviate the tax burden on manufacturers categorized under the North American Industry Classification System (NAICS) Sectors 31-33. By exempting these utilities from the state’s 2% sales and use tax, the legislation intends to support the manufacturing sector and encourage economic growth within the state.

Sentiment

The sentiment surrounding HB 43 appears to be generally positive among industry stakeholders, particularly within the manufacturing community. Proponents argue that such tax exemptions are crucial for maintaining competitiveness and operational viability in a challenging economic landscape. However, there may also be concerns from public finance advocates who fear the loss of tax revenue and its implications for funding state services.

Contention

Notable points of contention may arise regarding the long-term implications of such tax exemptions on state revenue. Critics could argue that while the immediate benefits to manufacturers are clear, the potential reduction in funding for public services, driven by decreased state revenue, could lead to broader economic issues. Additionally, the requirement for the Department of Revenue to develop rules for implementation might introduce administrative challenges that could complicate the execution of the bill's provisions.