Louisiana House Bill HB21

Louisiana 2018 1st Special Session

• Introduced: 2/16/18
• Refer: 2/16/18
• Refer: 2/19/18

Caption

Reduces the amount of certain corporate income tax deductions and provides for continued effectiveness of reductions to certain corporate income tax deductions and exclusions (Item #4) (OR +$16,500,000 GF RV See Note)

Impact

The impact of HB21 is significant, as it aims to streamline corporate taxation by solidifying previously agreed-upon financial benefits for corporations operating within Louisiana. Advocates suggest that making these tax benefits permanent will foster a more attractive business environment, potentially encouraging further investment and economic activity. However, the permanence of such tax reductions raises questions about long-term state revenue implications and the effectiveness of these benefits in stimulating sustainable economic growth.

Summary

House Bill 21 (HB21) proposes to amend Louisiana's corporate income tax structure by repealing previous sunset provisions regarding deductions and exclusions established by Act No. 123 of the 2015 Regular Session. The bill seeks to make various temporary reductions in corporate income tax permanent, effectively preventing a return to previous, higher rates. Notably, this includes a 72% exclusion on funds received from governmental entities for public transportation operations, as well as similar reductions in net operating loss deductions and other specified corporate deductions. This move will guarantee continued benefits for corporations beyond the initially intended time frame.

Sentiment

Overall sentiment around HB21 reflects the ongoing debate between supporting economic growth through tax incentives and the need for adequate state revenue. Proponents of the bill argue that it will enhance Louisiana's competitive edge by maintaining favorable conditions for businesses, while critics express concerns over the potential loss of substantial revenue needed for public services. The discussion surrounding the bill highlights a broader conflict between the needs of the business community and fiscal responsibility in governance.

Contention

Key points of contention surrounding HB21 include the decision to keep the exclusions and deductions at their reduced rates rather than allowing them to return to the original levels. This has sparked debates on whether such reductions genuinely benefit the state's economy or primarily serve corporate interests at the expense of needed public funding. Additionally, specific provisions affecting the oil and gas industry and mineral depletion allowances may raise further scrutiny, particularly in light of ongoing environmental and fiscal policy discussions.