LABI calls on governor to simplify tax code

By Sharon Brooks Hodge | May 17, 2016

BATON ROUGE – As a June special session of the Louisiana State Legislature appears imminent, an association of business executives says instead of raising revenue, the governor should focus on simplifying the tax code according to the Louisiana Association of Business and Industry (LABI).

“(LABI) members are encouraging the executive branch and legislative branch to wait for the recent changes in the tax code to take full effect so we will have a better picture of how much tax revenue is flowing into Louisiana’s coffers,” Brian Landry told the Louisiana Record.

Landry is vice president for political action at the LABI. The group, which represents more than 2,200 companies, has been vocal about proposed legislative actions to balance the state’s budget. Those actions could include trimming tax breaks for corporations.

When the legislature’s 25-day special session ended in March, the state faced a deficit of $800 million.

The LABI said the amount of the shortage fluctuates. For example, the deficit decreased from $2 billion to $750 million because of budget adjustments passed in the special session. Rather than meet in June to discuss increasing tax revenues, the time should be used to evaluate.

That is why the Task Force on Structural Changes in Budget and Tax Policy was created during the February/March special session, Landry said. The 13-member group, which has been meeting weekly, is expected to produce an interim report on Friday.

“We are closely monitoring the task force to see what changes will be recommended by them, which we expect the governor will use in his call for an additional special session this year,” Landry said.

Earlier this month, a commentary on the organization’s website written by its president, Stephen Waguespack, criticized the plan for lawmakers to meet a third time in a year for the purpose of raising taxes.

“The combined effect of the 2015 and 2016 legislative sessions will increase business taxes by an estimated $575 million in this fiscal year and $1.2 billion next year and even more in 2018. And that is just the employer share of the burden,” Waguespack said in the editorial.

LABI also takes issue with claims that tax breaks for corporations are the reason for the budget deficit. During the previous administration of Gov. Bobby Jindal, corporate tax exemptions grew by about $1 billion, reaching $1.96 billion in 2014, according to a study commissioned by the Louisiana Department of Revenue.

“Rhetoric in the Capitol continues to point to business tax exemptions as a primary problem plaguing the state budget – which is categorically false,” Waguespack’s editorial said.

Consequently, LABI members are encouraging the governor to shift away from "tax mode” and focus more on the tax code.

“The business community hopes Gov. Edwards will look closer into state spending and simplifying the tax code,” Landry said.

Rather than convening in June, Landry believes a fall special session will give Louisiana’s citizens a better picture of actual revenue numbers.

“Coming back into another hurried session will only lead to more piecemeal changes instead of true reform,” Landry said.

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