Louisiana House Bill HB19

Louisiana 2016 2nd Special Session

• Introduced: 6/5/16
• Refer: 6/5/16
• Refer: 6/6/16

Caption

Reduces the amount of certain ad valorem tax credits and provides for the carry forward rather than the refund of a certain portion of excess credit amounts (Item #36) (OR +$48,000,000 GF RV See Note)

Impact

The implications of HB 19 suggest a significant financial adjustment for businesses reliant on tax credits for their inventory taxes. By restructuring the refundability of excess credits, the bill ultimately lowers the immediate financial benefit that small businesses could claim. This is expected to yield an estimated increase of $48 million in general fund revenue for the state, which may influence budget allocations and funding for various initiatives depending on its fiscal impact.

Summary

House Bill 19 proposes a reduction in the tax credits available for ad valorem taxes paid on inventory held by manufacturers, distributors, and retailers from 100% to 80%. This modification impacts both state income and corporation franchise taxes, which are pivotal in determining the financial obligations of businesses in Louisiana. In addition, the bill alters the current refundability structure of excess tax credits, transitioning from a 100% refund for smaller tax liabilities to a scenario where 75% is refundable and 25% may be carried forward for future tax years, applicable only after January 1, 2016.

Sentiment

The sentiment regarding HB 19 appears mixed among legislators and stakeholders. Supporters argue that this measure will help stabilize the state's budget by increasing revenue through reduced tax credits. In contrast, critics express concern over the potential negative effects on businesses, especially smaller entities that may struggle with the reduced refund percentages and altered tax credit dynamics. The discussions surrounding the bill underscore a broader debate about balancing state revenue needs against the economic incentives necessary to support local businesses.

Contention

A notable point of contention within the discussions on HB 19 revolves around the effectiveness of reducing tax credits versus the potential downturn in economic activity as businesses recalibrate their tax strategies. Opponents fear that this adjustment could be counterproductive, possibly hindering business growth and investment in Louisiana, while proponents focus on the necessity of enhancing state revenues to fund public services. The issue of tax credits has historically been a contentious topic, as the implications spread across various economic sectors.