Senate Revenue and Fiscal Affairs Chairman Bret Allain and House Ways and Means Chairman Stuart Bishop said in separate interviews last week that they will co-author a package of tax bills during the spring regular session.
The two men, who oversee the Louisiana Legislature’s tax-writing committees, have been working on some segments of the plan for a year, dating back to informal meetings they held during the early months of 2020. But only recently have they begun the process of merging their individual efforts.
The tax package will be introduced for debate in the upcoming regular session that convenes April 12. Since it’s an odd-numbered year, the regular session will be fiscal in nature, meaning tax bills can be filed and passed.
The Republican chairmen have invited several stakeholders into the drafting process, including national voices like the Tax Foundation and the Council on State Taxation. Regarding the latter, Allain and Bishop say they’re largely driven by the goal of bettering the state’s standings in tax-related rankings, which would in turn make Louisiana more attractive to investors and businesses looking to relocate.
“Simplicity and predictability,” Allain says. “That’s the goal.”
The most important bills will be co-authored, with Bishop leading on the bills that must begin on the House side and Allain steering those that can be filed in the Senate. To the extent allowed, some of the bills will also be interconnected.
Senate President Page Cortez told LaPolitics last week that he hopes the package will be revenue neutral. Allain agrees, adding, “As much as possible. Obviously we don’t want to create a fiscal note we have to go and defend.”
Bishop wants a revenue neutral package, too, and he says an early tally is coming soon. “The House has already drafted bills and sent them off and we’re awaiting fiscal notes to see exactly what the package does,” Bishop says.
While bill drafts and other details were not yet available for release, the package, according to the chairmen, has five planks…
Personal and corporate income taxes: “Our goal is to lower the rate as much as we can and add stability,” Allain says. “For me, this is the top issue in the tax package.”
Inventory tax credit: While local governments have long opposed any changes to the inventory tax credit, many lawmakers want to reform the convoluted system that necessitates such a credit without impacting local coffers. At the same time, many local officials would like to see the governor’s executive order on industrial tax exemptions made permanent. “Maybe we can come together and marry those issues,” Allain says, “where everyone gets what they want.”
Franchise tax: “We’re taking a look at how we can phase out and replace it,” Bishop says. “The idea of us taxing people on the amount of capital in this state isn’t doing us any favors.”
Tax administration: This category has bills that will probably be the easiest for the chairmen to pass. For example, they want the state aligned with the new IRS partnership audit provisions and they’re exploring different options for people who work in Louisiana on a temporary basis.
Severance taxes: This conversation with the oil and gas industry began in earnest this week when Allain and Bishop asked representatives to help them come up with a compromise to make severance taxes, and other elements of tax law, fair to both industry and the state.
Bishop says he also plans to push a revamped centralized sales tax collection system as part of his own House package. That proposal is expected to be authored by Speaker Clay Schexnayder. Allain says he supports the concept and expects Senate members to file similar bills on the topic.
The plan is an ambitious one, especially as lawmakers take up other challenging issues like the budget, unemployment and the coronavirus. But legislators rightfully feel like they should swing for the fences this spring. They may not get another shot.
The Legislature’s next fiscal session will be during an election year (in 2023), when the collective political will to make changes won’t be nearly as strong. As such, many in the Capitol’s orbit believe this year will be the last opportunity lawmakers have this term for substantive tax reforms. It’s now or never for this term of state government.