Alcohol-related tax credits and exemptions on Louisiana’s law books since the 1930s went under the microscope Tuesday during legislative debate at the State Capitol.
“Consumption of beverage alcohol is not a sin,” lobbyist Chris Young told members of the Revenue Study Commission, as he made a case for tax credits, exemptions and discounts.
Young, representing the Beer Industry League, said moderate alcohol consumption can provide significant health benefits.
The committee, which is looking at the myriad of tax exemptions that reduce state government revenue, also looked at tobacco tax diversions totaling millions of dollars a year.
No recommendations to eliminate any of the tax breaks were made. Legislation to do so would not materialize until next year, closer to the regular session.
House Speaker Chuck Kleckley, who owns convenience stores, questioned why tobacco dealers should get a $7 million annual discount on stamps that are purchased to pay state cigarette taxes.
Kleckley, R-Lake Charles, said he cannot shift costs to state government in his private business. Instead, he said, expenses are passed on to consumers.
“Why is it justified as a tax credit for you? But in my business, and in many other businesses, it’s just the cost of doing business,” he said.
David Tatman, of the Louisiana Association of Wholesalers, explained what dealers do to get the discount, which amounts to 6 percent of the 36-cent state cigarette tax.
For a reduction of about two cents per carton, dealers buy stamps from state government, break open cases of cigarette cartons, open the cartons, affix the stamps, close the cartons and distribute them to retailers, Tatman said.
On beer and alcohol, the state grants a discount on reporting and remitting taxes, a refund or credit on damaged products, and a tax exemption on liquor and wine sold for religious uses.
Beer and alcoholic beverages shipped outside Louisiana are free from excise taxes.
Many of the alcohol- and tobacco-related tax exclusions date to the 1930s.
Young said underlying public policy is to offer compensation. He said alcohol wholesalers are primarily the ones paying excess taxes. He said it takes work to compile reports and make payments.
State Sen. Dan Claitor, R-Baton Rouge, said he realizes one of Jesus’ first miracles was to turn water into wine.
“It can’t be that sinful,” he said, referring to alcohol.
Then Claitor asked Young exactly what work is involved in reporting and remitting taxes due. Beer dealers get a 2 percent discount on taxes for accomplishing those tasks.
Young said he has never prepared the reports although his clients have.
“They tell us it is time-consuming and a significant responsibility,” he said.
Claitor then pressed for a history of a 3.33 percent tax discount given to liquor and wine dealers for reporting and filing excise tax returns along with the full amount due.
“I wasn’t around then,” Young said, referring to when the discount was created.
State Rep. Joel Robideaux, R-Lafayette, interjected that the 3.33 percent tax discount is a more recent addition that only is 40 years old.
“I wasn’t born then,” Young responded.
Robideaux didn’t believe him, jokingly reminding Young that he was under oath.
After completing a session marred by disagreements on the best way to balance the state operating budget without adequate money to keep services at their current level, legislators are taking a lengthy look at tax breaks. The state grants several billion dollars a year in tax exclusions, suspensions, deductions, credits, refunds, rebates and preferential tax calculation methods.