Louisiana legislators have adopted a measure to temporarily halt the state's capital stock tax for some businesses; the suspension would be extended under a bill introduced in the special session.
H.C.R. 66, introduced May 7 by House Ways and Means Committee Chair Stuart Bishop (R), was adopted by the Senate with amendments on a 27–8 vote June 1. The House on the same day agreed to the changes, 66 to 26, and the bill was enrolled and signed by the speaker of the House.
The measure will temporarily suspend the lower tier of the state’s capital stock tax, called the corporation franchise tax, for “Louisiana small business corporations,” as well as the initial tax of $110 in the first accounting period in which an entity becomes subject to the tax.
The lower tier of the tax is $1.50 per $1,000 on the first $300,000 of taxable capital. The suspension applies to tax periods beginning between July 1, 2020, and June 30, 2021.
The concurrent resolution defines small business corporation as “a business exercising its charter, or qualified to do business or actually doing business in this state, or owning or using any part or all of its capital, plant, or any other property in this state, that is subject to the corporation franchise tax, and that has taxable capital of $500,000 or less.”
The measure is intended to mitigate some of the financial losses businesses have experienced because of temporary closures and limited operations from the COVID-19 pandemic.
It would reduce Louisiana’s general fund revenues by an estimated $5.4 million in fiscal 2020 and $400,000 in fiscal 2021, according to the fiscal note.
In a May 19 blog post, Janelle Cammenga of the Tax Foundation called the measure “a positive move toward a more neutral tax code” and urged lawmakers to permanently remove the tax “when revenue allows.”
H.B. 17, introduced by Bishop on June 1 during the special session, would extend the suspension for tax periods beginning between July 1, 2020, and June 30, 2024. It was referred June 1 to the House Ways and Means Committee.
Bishop couldn't be reached for comment by press time.
Meanwhile, the issue of centralized sales and use tax collection will be revisited in the special session.
H.B. 14, introduced June 1 by House Speaker Clay Schexnayder (R), would hold a referendum on whether local sales and use taxes should be collected by the state rather than local governments.
A similar bill was introduced by Rep. Michael Echols (R) during the regular session. H.B. 428 was left pending in the House Ways and Means Committee.
Schexnayder did not respond to a request for comment by press time.
Centralized sales tax collection was recommended by the Louisiana Economic Recovery Task Force.