The state’s largest business lobbying group warned Gov. Bobby Jindal on Wednesday that his tax proposal is unacceptable to the business community.
Dan Juneau, president of the Louisiana Association of Business and Industry, blamed problems with the plan on the Jindal administration drawing up the proposal in a very short period of time, resulting in a simple shift in tax burden.
“There’s got to be winners and there’s got to be losers,” Juneau said. “The business community has become the designated loser.”
The Jindal administration told legislators Tuesday that the proposal would shift $500 million of the state tax burden from individuals to businesses.
The state’s personal income and corporate taxes would disappear in favor of an increased state sales tax and a broadening of the base. The state sales tax would increase from 4 percent to 5.88 percent. In addition, many currently untaxed services would be taxed, including a wide range of services that businesses purchase from other businesses.
“We ... have concerns about the impact of a tax increase approaching a half-billion dollars on the profitability of businesses in Louisiana,” Juneau said.
Juneau published a column on LABI’s website outlining his problems with the proposal. Minutes later, House Democrats gathered in the State Capitol’s Memorial Hall to publicly voice their criticism of the plan.
A Baton Rouge-based public research group and hundreds of religious leaders also have raised concerns.
The criticism by Juneau and House Democrats coincided with an economic development coup for the Jindal administration. IBM plans to bring 800 jobs to downtown Baton Rouge.
At a news conference to announce IBM’s plans, Jindal brushed off LABI’s complaints about the tax change. The governor said the only people who like the current tax system are “lawyers, lobbyists and the people who benefit from loopholes.” He pointed to a study released Tuesday by two think tanks — the Pelican Institute for Public Policy and the Beacon Hill Institute — that concluded the tax proposal would generate an average of $910 in extra cash for the state’s households and create nearly 12,000 new jobs within four years.
“This is good for Louisiana families and Louisiana businesses,” Jindal said.
The Jindal administration also distributed a news release from the Louisiana Oil and Gas Association regarding an agreement on severance tax incentives and sales tax incentives affecting the oil and gas industry.
LOGA’s president, Don Briggs, said the administration pledged to keep the oil and gas natural gas service sector exempt from a state sales tax on services.
At the House Democrats’ news conference, state Rep. James Armes, D-Leesville, gave the governor a new name, styling him as “Jindal Hood” in a nod to Robin Hood. He said the governor’s tax plan would benefit wealthy residents, such as Saints owner Tom Benson, who likely pays thousands of dollars a year in state income taxes.
He said, for instance, the governor’s economic development secretary, Stephen Moret, would save at least $19,200 a year in income taxes under the plan. The governor would save at least $7,800, he said.
“This,” Armes said of the tax plan, “... will take from the middle class and give to the wealthy.”
House Democratic leader John Bel Edwards, D-Amite, said the governor’s plan would hurt seniors, the middle class and the poor. He said the plan would punish small businesses.
The Democrats said they do not have an alternative plan since they question whether the state’s tax code is broken.
Opposition from Democrats likely came as no surprise to the governor, who is a Republican. However, his administration sat down with business leaders to discuss the proposal.
Criticism from the state’s largest business lobbying group could set the stage for a political power struggle once the legislative session starts on April 8.
In his column, Juneau said Tim Barfield, executive counsel for the state Department of Revenue, told business leaders last week that businesses would pay $400 million more under the governor’s proposal. Barfield is Jindal’s point man on the tax plan.
Barfield told legislators this week that the impact would be $500 million.
Juneau said LABI participated in meetings with the Jindal administration as the plan was developed. “Those officials never suggested in those meetings that the plan would be balanced on the backs of the business community,” he wrote.
In a telephone interview, Juneau praised Barfield as honest and bright.
The problem, Juneau said, is that the Jindal administration had to take $3.5 billion in state revenue from one column and shift it to another column in very short period of time. Businesses took the hit, he said.
Unless the plan changes, LABI will be opposed, Juneau said.
Advocate business writer Timothy Boone contributed to this report.