State tax structure studied
After months of meetings, a commission formed to look at the state’s tax structure will draw to a close early next year.
Before ending its existence, the Revenue Study Commission will have reviewed hundreds of tax breaks, ranging from a solar energy tax credit to a sales tax exemption on Jazz Fest tickets. The tax breaks divert several billion dollars a year from a state budget buckling under the weight of costly expenses.
The commission’s chairman, state Rep. Joel Robideaux, said he expects the committee to make policy recommendations rather than attempt to strip away tax breaks, some of which date back to the 1930s when Huey Long was in power.
“We’re bouncing around those type of policy issues,” Robideaux said. “It’s definitely going to result in something.”
He said ideas include:
- Putting an expiration date on future tax breaks.
- Requiring legislative review if tax breaks exceed their expected drain on the state budget.
- Forcing legislators to introduce proposed tax breaks a year ahead of when they can be adopted, giving fiscal staff more time to review them.
As the commission works, the Jindal administration is making rounds ahead of the legislative session that starts in April.
The state is facing a nearly $1 billion shortfall in the upcoming state budget year. Money is short for colleges and public hospitals. At the same time, businesses and individuals lower their state tax bills through exclusions, suspensions, deductions, credits, refunds, rebates and preferential tax calculation methods.
Gov. Bobby Jindal said in August that he wants a flatter, lower tax code that will encourage economic development.
Exactly what that means still is unclear, although a 43-page primer written by the Jindal administration suggests scaling back on the complicated system of tax exemptions in exchange for adopting lower tax rates.
Tim Barfield, executive counsel for the state Department of the Revenue, recently spoke to the Louisiana Committee of 100. He will stop by the Rotary Club of Baton Rouge on Wednesday.
To the Committee of 100’s membership of businesspeople, Barfield showed a PowerPoint presentation that focused on how Louisiana compares to the rest of the nation.
Points included the state’s business climate, tax burden and employment numbers.
Michael Olivier, the committee’s CEO and former secretary of the state Department of Economic Development, said Barfield painted a picture of the tax landscape.
One idea, Olivier said, is to hold a convention to rewrite the state’s constitution.
He said businesspeople want simplicity, rather than Louisiana’s complicated tax structure that eliminates the state from consideration on many projects.
“We need to simplify so on the face you can see how Louisiana stacks up without evaluation, investigation and spreadsheet analysis,” Olivier said.
State Sen. Jack Donahue, who created the Revenue Study Commission, said he wanted legislators to get a good understanding of what the state gives away in tax credits, rebates and exemptions.
Donahue, R-Mandeville, said it is too early to speculate on whether some might disappear.
“I saw some things that kind of raised eyebrows,” he said. “I’ll wait my turn to see if there’s anything I can do about those.”
Robideaux, R-Lafayette, said the commission wrote off 80 tax breaks from review because they involved the elderly or a charity.
Between December and January, legislators will finish looking at the 360 that did rate their attention, he said.
“It’s hard to say we’re giving away too much (money),” Robideaux said. “ I think we have too many of them.”