A Louisiana House panel has advanced a measure that would temporarily suspend some corporate franchise taxes at an estimated total cost of $10.2 million.
H.C.R. 66, introduced by Rep. Stuart Bishop (R), was reported May 13 from the House Ways and Means Committee by a vote of 12 to 0; Bishop chairs the committee. The concurrent resolution was amended, ordered engrossed, and passed to third reading on May 15.
H.C.R. 66 as engrossed would temporarily suspend the lower tier of the corporation franchise tax levied on domestic and foreign corporations and the initial tax levied on business entities subject to the tax. The suspension would take effect immediately upon adoption of the resolution and would extend through the 60th day after adjournment of the 2021 regular legislative session.
The franchise tax is levied at two rates — $1.50 per $1,000 on the first $300,000 of taxable capital, and $3 per $1,000 on taxable capital over $300,000, according to the concurrent resolution's fiscal note. The resolution as amended would suspend only the lower rate.
The concurrent resolution says the taxes would be suspended to “mitigate some of the financial losses suffered by businesses” as a result of the general stay-at-home order and the temporary closure of some businesses in light of the COVID-19 pandemic.
Suspending the taxes would reduce general fund revenues by an estimated $9.1 million in fiscal 2020 and $1.1 million in fiscal 2021, according to a May 12 fiscal note.
Bishop did not respond to requests for comment by press time.
The Ways and Means Committee advanced another concurrent resolution (H.C.R. 76) May 13 by a vote of 13 to 0. It requests that any proclamation convening an extraordinary session of the Legislature in 2020 include changes to the carryback provisions of the corporate income tax deduction for net operating losses under the federal Coronavirus Aid, Relief, and Economic Security Act.
The provisions, designed to provide tax relief to businesses, allow taxpayers' NOLs earned in 2018, 2019, and 2020 to be carried back for five years.
H.C.R. 76, introduced by Ways and Means member Mark Wright (R), was also amended, ordered engrossed, and passed to third reading on May 15. Wright told Tax Notes May 15 that H.C.R. 76 is based on a recommendation from the Louisiana Legislative Advisory Task Force on Economic Recovery. He said a bill on the topic could be introduced during a fiscal session this summer.