Ahead of a special session of the Louisiana Legislature, Republicans have prefiled bills that would provide tax breaks for businesses.
The special session is scheduled to begin September 28 and end by October 27. Legislation heard during the session will be limited to the 70 items listed in a proclamation issued September 21 and can include bills related to “tax credits, incentives, rebates, exclusions, exemptions, deferments, and abatements to provide relief during declared states of emergency and disaster.”
S.B. 1, prefiled September 24 by Sen. Rick Ward III (R), would allow taxpayers to carry forward income and franchise tax credits for local ad valorem inventory taxes until the tax credit balance is exhausted. Under existing law, the nonrefundable portion of the tax credit can be carried forward for five years. The bill would take effect January 1, 2021.
Sen. Stewart Cathey Jr. (R) introduced three bills (S.B. 2, S.B. 3, and S.B. 4) that would create sales tax exemptions for utilities and farm equipment.
S.B. 2 would exempt the sale of utilities to commercial farmers or agricultural manufacturers affected by a declared state of emergency or disaster. The exemption would apply for sales tax periods beginning on or after November 1, 2020, and ending on or before June 30, 2021.
S.B. 3 would create a sales tax exemption for the sale or use of “steam, water, electric power or energy, or energy sources” by businesses affected by a state of emergency or disaster. The bill would take effect immediately upon signature by the governor and the exemption would apply to sales tax periods between November 1, 2020, and June 30, 2021.
S.B. 4 would exempt some farm equipment from sales tax during a declared state of emergency or disaster. Under the bill, sales tax on farm equipment listed in the bill would apply only to the sale price above $500,000 for each item purchased. It would also become effective once signed by the governor.
The four bills were referred to the Senate Revenue and Fiscal Affairs Committee. The bills' sponsors did not respond to requests for comment by press time.
Other bills prefiled for the special session include H.B. 5, which would create an income or franchise tax credit for broadband carriers participating in the federal Rural Digital Opportunity Fund Action to help rural, underserved areas get broadband internet access.
The credit would be $500 per structure and could be claimed to offset up to 50 percent of a taxpayer's annual income tax liability in Louisiana and up to 50 percent of its corporation franchise tax liability. The credits could be carried forward for up to 10 years. The total amount of credits would be capped at $50 million.
The bill was filed September 25 by Rep. Daryl Deshotel (R). He introduced a similar bill during the special session in June (H.B. 68) that passed the House by a vote of 80 to 11 but was left pending in the Senate revenue committee.
Another bill (H.B. 8), prefiled September 25 by Rep. Phillip DeVillier (R), would create a severance tax exemption for oil produced from stripper wells — those that produce a small amount of oil — in any month during which the average value of oil is less than $75 per barrel. The exemption would be available January 1, 2021, through December 31, 2029. To qualify, the taxpayer would have to submit reports verifying that the well did not produce an average of more than 10 barrels of oil per day during the months for which they are claiming the exemption.
Deshotel and DeVillier did not respond to requests for comment by press time.