After months of work, the Revenue Study Commission opted against recommending that any specific tax exemptions be stripped off Louisiana’s books.
The commission instead filed a report with the Louisiana Legislature on Tuesday that encourages better data, more oversight, possible caps on exemptions and the purchase of economic modeling tools to get a handle on the cost of exclusions, suspensions, deductions, credits, refunds, rebates and preferential tax calculation methods.
The commission’s chairman, state Rep. Joel Robideaux, said there often is no way of knowing whether an incentive program is working.
“What the public’s going to get out of it is they’re going to get legislation filed that’s going to make the process more transparent,” he said.
Robideaux, R-Lafayette, said the public will be able to monitor the success or failure of tax breaks.
The tax breaks divert several billion dollars a year from a state budget buckling under the weight of costly expenses. Some of the incentives have been on the state’s books since the 1930s.
The Revenue Study Commission began work in July and eventually reviewed hundreds of exemptions. During the group’s work, Gov. Bobby Jindal announced that he plans to push for the elimination of the state’s personal income and corporate taxes in the upcoming legislative session.
State Sen. Robert Adley, R-Benton and a commission member, said he concluded that more information is needed once incentives are in place to allow legislators to make a judgment on whether something is being accomplished.
For example, Adley said incentives are given to companies in exchange for promises of job creation. He said the state Department of Economic Development was slow in providing the commission with job creation numbers.
“One disturbing thing is that each time we asked LED for a list of companies and how many jobs are actually there, we never got that list,” Adley said.
The Revenue Study Commission noted in its report that it never received requested information on tax expenditures administered by the economic development department, which oversees such incentives as the Quality Jobs Program.
State Economic Development Secretary Stephen Moret said his agency provided written or oral testimony on all of the exemptions on the commission’s agenda as well as a detailed primer on major LED-managed exemptions programs.
“We did receive a variety of detailed information requests from the RSC, and we have been preparing responses to those that are nearly complete. Unfortunately, we were not aware that the RSC was about to publish its final report. Nevertheless, we will be providing responses to their outstanding requests in the near future,” Moret said.
State Sen. Dan Claitor, a commission member, said legislators should now be able to make individual decisions on whether to file bills repealing certain exemptions.
“We accomplished quite a bit as far as educating various legislators and the public,” said Claitor, R-Baton Rouge.
Claitor said some exemptions need to be tightened up or disappear. He cited problems with a solar energy tax credit that applies to 50 percent of the first $25,000 in purchase or installation expenses. The state Department of Revenue estimates the credit will reduce state government revenue by more than $13 million in the current fiscal year that ends June 30.
Critics of the credit complained that out-of-state contractors can install systems through a lease and receive the incentive.
“That’s a good example of an abuse,” Claitor said. “The legislative intent has been distorted and abused such that the word system doesn’t have the definition I would expect it to have.”
The Public Affairs Research Council, a Baton Rouge-based public policy research organization, said the commission raised awareness and knowledge.