- Associated Press - Monday, April 24, 2017

BATON ROUGE, La. (AP) - Republican lawmakers on the House tax committee Monday panned Gov. John Bel Edwards’ main business tax proposal, bolstering expectations the tax will be rejected amid concerns it would chase away economic development in Louisiana.

The concept of a tax on business sales - a gross receipts tax - was getting its first legislative hearing in the House Ways and Means Committee, after the governor unveiled the idea a month ago. The hearing continues Tuesday, with business groups and the general public getting their turns to weigh in on the idea.

The tax would raise an estimated $416 million a year in new revenue, to help offset expiring sales taxes. But there’s little public support for the proposal, even from the Democratic governor’s allies.

In questioning Monday, GOP lawmakers on the conservative, majority-Republican tax committee described their opposition.

“I just don’t see this as a fair tax, and I don’t see this as a way to promote business growth,” said Rep. Dodie Horton, a Republican from Haughton.

Shreveport Rep. Alan Seabaugh said he expects businesses would pass the tax to consumers. Baton Rouge Rep. Barry Ivey said it would add another layer of complexity to an already complicated tax system. Both are Republicans.

Rep. Jay Morris, a Monroe Republican, said past administrations may have been “a little too generous” to business in Louisiana’s tax structure. But he added: “We don’t want to swing too far in the other direction, because jobs are critical and we do want to create an environment where we are welcoming.”

Edwards frames the tax, called a Commercial Activity Tax, as getting companies that use various loopholes to pay “their fair share.” He cites data that 80 percent of corporate income tax filers in Louisiana didn’t pay state income taxes in 2015.

Rep. Sam Jones, a Franklin Democrat sponsoring the tax proposal for Edwards, said “the people who get up every morning, go to work and take care of their families” are paying more of their income in taxes than many of the wealthiest corporations in the state.

“Those folks have no lobbyists except you and me,” Jones told the committee, contrasting working families with businesses represented by what he described as a room packed with “Armani suits.”

Luke Morris, assistant director of the revenue department, said the tax would provide a steady revenue stream for Louisiana without being riddled with credits and exemptions, making it easier to file.

“It’s more or less a tax on the privilege of doing business in Louisiana,” he said.

The gross receipts tax is the centerpiece of Edwards’ tax overhaul, which seeks to end repeated budget gaps by more heavily taxing businesses. His tax package is intended to replace $1.3 billion in temporary taxes set to expire in mid-2018, while also raising another $400 million for next year’s budget.

The tax, nicknamed the CAT, would tax a business’ sales, without accounting for profit margins or expenses. Only five other states have similar taxes on the books, according to the Edwards administration.

To try and lessen criticism, the administration tweaked the proposal before it was filed to respond to complaints that a gross receipts tax would hit certain businesses too hard. Carve-outs for those businesses cut the income estimate from the tax in half.

Under the proposal, varying levels of tax would be paid depending on business type, their levels of gross receipts and considerations for how they file taxes. Some companies would pay as little as $250 a year while others could pay thousands or more.


Follow Melinda Deslatte on Twitter at https://twitter.com/melindadeslatte

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