A Louisiana task force has recommended “comprehensive tax reform” to help rebuild the economy in the wake of the COVID-19 pandemic.
The recommendation is included in the Louisiana Economic Recovery Task Force's first report, released May 8.
The task force — composed of over 60 members from the private sector — was established April 17 by House Speaker Clay Schexnayder (R) and Senate President Patrick Page Cortez (R).
The group was charged with “developing comprehensive policy, legislative, and regulatory recommendations to immediately restart the Louisiana economy and invest in the long-term recovery of households, workers, and businesses, while simultaneously recognizing the critical need to protect the health and safety of all Louisiana residents and workers,” according to the report.
The report’s recommendations for tax reform came from a smaller work group that was asked to focus on changing tax policies that hinder job growth and investment. That group includes members of the construction, oil and gas, technology and cybersecurity, retail, and telecommunications industries.
The work group recommends reducing the severance tax rate by 50 percent from 12.5 percent of gross value to 6.25 percent.
The report says that H.B. 506, pre-filed February 28 by Rep. Phillip DeVillier (R), could be a potential legislative instrument for the proposal.
H.B. 506 as introduced would reduce the severance tax rate from 12.5 percent to 8.5 percent in half-a-percentage-point increments by July 1, 2028. The bill was later amended to reduce the severance tax rate on oil from 12.5 percent to 2 percent from July 1, 2020, through June 30, 2021, if the price of oil falls below $30 per barrel during that time.
The report also recommends suspending, reducing, or reforming the telecommunications ad valorem tax; clarifying the uses of the digital media tax credit and expanding its applicability beyond products; reforming the sales tax system to establish a simpler, unified sales tax base; replacing the existing Louisiana Industrial Ad Valorem Tax Exemption Program process with “a more streamlined, simple framework”; reforming the inventory tax and credit; and simplifying the “tax system overall to lower rates and expand the base.”
It calls for establishing centralized sales tax collection and auditing, noting that H.B. 429, H.B. 791, and H.B. 428 could be legislative vehicles for implementing the recommendation.
H.B. 429, pre-filed February 27 by Rep. Tanner Magee (R), would create a constitutional amendment to establish a centralized commission to simplify local sales and use tax collections for remote sellers.
H.B. 791, also introduced by Magee, would allow the Louisiana Sales and Use Tax Commission for Remote Sellers to remit local sales and use taxes to local tax collectors on behalf of dealers with physical presence in the state who elect to use the commission. The bill received a favorable report May 7 from the House Ways and Means Committee.
H.B. 428, pre-filed February 27 by Rep. Michael Echols (R), proposes a constitutional amendment to remove the authority of a local governmental subdivision to collect sales and use taxes it imposes and instead allow the Legislature to provide by law for the centralized collection of sales and use taxes.
The recommendations are for lawmakers to consider during the 2020 legislative session.