Reversing a trend that has sparked political outrage on both the left and the right, corporate state tax collections have now moved into the black this year.
But it still appears that corporate tax collections will fall short of projections thanks to the proliferation of tax avoidance laws.
A shortfall would deepen the hole that Gov. John Bel Edwards and the Louisiana Legislature are trying to close now as they try to craft a budget for next year.
Through April, corporate income and franchise tax collections for the current fiscal year totaled $74 million, according to the latest figures from the Department of Revenue. (The figure does not include money collected under the state’s tax amnesty program.)
Through March, corporate tax collections for the year had been a minus $152 million, as corporations took advantage of Louisiana’s generous tax avoidance laws.
“At least we’re trending in the right direction,” Kimberly Robinson, Department of Revenue secretary, said when asked about the numbers Friday.
“It remains to be seen what will come in during the final two months,” offered Commissioner of Administration Jay Dardenne, the state’s top budget official.
State officials have projected that corporate tax collections will reach $359 million through June 30, the end of the fiscal year. So the treasury needs to collect $285 million more during those two months to get there.
Figures from the past two years suggest that tax collections won’t make it, that April is the treasury’s big month.
Tax collections totaled $39 million for May and June in 2014 and $17 million for those two months in 2015, according to Jim Richardson, an LSU economist who sits on the four-member state board that estimates tax collections.
“Unless we have an unusually good May and June, we won’t make it,” Richardson said in an interview, adding that he wasn’t giving up hope since changes in tax laws last year are making it harder to predict the final numbers this year.
News reports in February, March and April that the state has been paying out more in tax rebates to companies than collecting from them has prompted Democrats and Republicans to demand changes in tax laws to make big companies pay more.
Lawmakers did eliminate some business tax breaks during the special session earlier this year, but powerful business lobbyists succeeded in limiting the damage. The biggest tax increase came in the form of a 1-cent increase in the state sales tax, a measure that hits the poor hardest.
Members of a task force panel studying Louisiana’s tax laws voiced opposition Friday to raising the state sales tax even higher to help close the state’s $600 million budget deficit.
Edwards has asked the panel to recommend how to raise revenue during a special legislative session that he plans to hold shortly after the regular session ends on June 6.
During a meeting at the State Capitol on Friday, the 13 members indicated that they still need to learn more before they can make recommendations that Edwards wants by May 15. To meet his deadline, they would have to approve recommendations at their meeting next Friday.
“We don’t have enough time to get everything in order,” Richardson, who cochairs the task force, said afterward. “We’re aiming for something by May 20 or May 27.”
A presentation from Greg Albrecht, the Legislature’s chief economist, showed that the easiest way to raise big dollars is by making changes to the individual income tax code. Edwards has suggested halving the state deduction that taxpayers get from itemizing deductions on their federal tax returns.
The Republican-controlled Legislature, however, has shown no appetite for touching the issue.
Lawmakers do seem open to Edwards’ call that they limit tax breaks. But no one is sure which ones, and it’s unclear whether the task force will have enough time to offer substantive recommendations there.
What was clear to anyone watching the task force meeting Friday is that Louisiana has a bewildering number of tax breaks that add up to $6.1 billion in uncollected revenue.
“I sometimes say we have more of an exemption code than an income tax code,” Albrecht told them, a comment that drew a rueful laugh.
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