Louisiana House Bill HB481

Louisiana 2015 Regular Session

• Introduced: 4/3/15
• Refer: 4/3/15
• Refer: 4/13/15

Caption

Reduces the amount of the refundable investment income tax credit authorized under the enterprise zone program, imposes an annual limit on the total value of tax credits which may be approved, and sunsets the tax credit (OR INCREASE GF RV See Note)

Impact

The implications of HB 481 on state laws and economic practices are significant. By reducing the refundable investment tax credits, the bill limits the financial support available for businesses investing in property improvements within designated enterprise zones. This is expected to affect the attractiveness of these zones for potential investors, potentially reducing capital flow into regions that are economically struggling. The imposition of an aggregate limit on tax credits also raises questions about the long-term sustainability of the enterprise zone initiative and its ability to spur economic growth in targeted areas.

Summary

House Bill 481 aims to alter the existing refundable investment income tax credit under the enterprise zone program. The bill proposes to reduce the credit from 1.5% to 1% of qualified capital expenditures, thereby decreasing the financial incentive available to businesses engaging in construction and rehabilitation projects. This change is designed to limit the fiscal impact of the enterprise zone program as it relates to state expenditures. Additionally, the bill introduces a cap on the total value of tax credits that can be approved in a fiscal year, setting this limit at $10 million, and establishes a sunset provision for the tax credit, scheduled to end on January 1, 2020.

Sentiment

The general sentiment around the bill ranges from cautious support to vocal opposition. Proponents argue that the adjustments are necessary for fiscal responsibility and to prevent over-reliance on tax incentives that may not yield adequate returns in terms of economic development. Conversely, opponents express concern that reducing the tax credits will deter investment in areas most in need of economic revitalization, undermining progress made under the enterprise zone program. This polarized sentiment illustrates a broader debate on the role of government incentives in driving economic growth.

Contention

Notable points of contention include the timing and application of the sunset provision, which critics argue may unfairly disrupt ongoing and future projects that rely on the tax credits for feasibility. Additionally, the bill's supporters and detractors continue to debate the efficacy of the enterprise zone program overall and the impact these changes might have on local economies, employment rates, and the long-term economic vitality of designated zones. As stakeholders consider these issues, the conversation around HB 481 reflects deeper questions about the balance between state fiscal health and local economic development needs.