Louisiana Lawmakers Pass Tax Reforms, Await Governor's Approval on Key Measures

Louisiana lawmakers have successfully passed a series of tax reforms during the 2023 regular session, with some measures awaiting the governor's approval. While several bills related to sales and income taxes have been signed into law, others hold significant implications for taxpayers and state revenue.

The most notable change stems from Senate Bill 1, sponsored by Rep. Bret Allain, R-Franklin, which aims to gradually eliminate the state's corporate income tax imposed on businesses' net worth or accumulated wealth. Under SB 1, if combined corporate income and franchise taxes surpass $600 million, the franchise tax would be reduced by 25% annually. The bill is contingent upon the approval of Senate Bill 6, also by Allain, which seeks to reduce sales tax and project facilities rebates through the state's Quality Jobs program by half of any reduction in the franchise tax rate.

Allain has expressed that the anticipated $140 million in savings from SB 6, along with changes made to the corporate income tax three years ago that limited net operating losses, will more than offset the approximately $300 million generated by the franchise tax each year. Governor Edwards has not indicated when or if he will sign the bill.

Another pending bill awaiting the governor's approval is House Bill 562, proposed by Speaker Clay Schexnayder, R-Gonzales, which aims to extend Louisiana's film tax credits.

In addition, House Bill 558, authored by New Iberia Rep. Beau Beaullieu, calls for transferring the responsibility of local sales tax collections from the Department of Revenue to the Uniform Local Sales Tax Board. This centralized system, scheduled to commence operations in January, will cover all 54 taxing jurisdictions in the state. Motivated in part by a lawsuit challenging the sales tax system, supported by the Pelican Center, the bill was signed by Governor Edwards on Wednesday.

Dan Erspamer, CEO of the Pelican Institute, praised the legislature's efforts, stating, "The Legislature took important steps this session on tax reform by enacting a permanent phase out to the state's punishing franchise tax and streamlining a convoluted sales tax collection system, both the subject of many years of debate across the state." Erspamer further highlighted the Pelican Center's role in representing Halstead Bead in the legal challenge, which helped bring attention to the issue and facilitated these crucial changes.

Governor Edwards has already approved several other bills, including SB 8 by Sen. Jay Leneau, D-Alexandria, which eliminates interest on disputed taxes; SB 89 by Sen. Jeremy Stine, providing an exclusion for individual income tax on capital gains from the sale of certain businesses; and SB 428 by Rep. Thomas Pressly, R-Shreveport, addressing income tax exclusions for specific businesses, estates, trusts, and partnerships.

Furthermore, Senate Bill 5, authored by Allain, received the governor's signature. This bill provides alternatives in lieu of payment under protest for ad valorem taxes. Additionally, HB 256 by Rep. Gregory Miller, R-Norco, extends the deadline for remitting local sales taxes when they coincide with holidays, while HB 171 by Beaullieu modifies the threshold at which online sellers are required to remit state and local sales taxes.

While acknowledging that more work remains, Dan Erspamer commended the legislature for pursuing policies that will bring jobs and opportunities to the people of Louisiana, setting the stage for the state's comeback story.