Louisiana businesses would get a major tax break under legislation passed by the House Thursday, only a week after House members approved a state budget that would make businesses pay more.
House Bill 828 phases out the corporate franchise tax over five years.
The measure, approved 69-33, would cost the state $36.5 million next year but cumulatively $912 million over the next five years.
The measure makes no attempt to make up the revenue loss.
State Rep. Cameron Henry, R-Metairie, the sponsor, told the House that it was needed to “send a signal” to the business community that Louisiana remains a business-friendly state, in light of the other measures passed by the House earlier in May that would roll back up to 25 percent of numerous business tax incentives.
Henry also said the vote would make it easier for lawmakers when they return to their districts. Left unsaid was that many of the lawmakers will be running for re-election this fall and can now tout having voted to cut business taxes.
Several Democrats questioned the wisdom of approving a tax cut when the Legislature has yet to find nearly $200 million for the state’s hospitals and K-12 public school system next year.
State Rep. John Bel Edwards, D-Amite, said the amount lost from the business tax cut would offset the money raised by the 32-cent tax increase on cigarettes that the House has already approved.
“I don’t know how we can justify that back home,” said Edwards, who is the Democratic nominee for governor. The 32-cent cigarette tax would raise $68 million next year.
“It’s almost like we’re robbing Peter to pay Paul,” added state Rep. Roy Burrell, D-Shreveport.
The House added an amendment sponsored by Rep. Joel Robideaux, R-Lafayette, that would not permit Henry’s tax cut to take effect if another bill approved by the House ultimately fails to become law. That measure is House Bill 629 by Rep. Katrina Jackson, D-Monroe.
Jackson’s bill would raise $213 million next year by reducing corporate income and franchise tax credits by 20 percent.
In an interview afterward, Robideaux said he and other House members fear that the Senate could move forward with the business tax cut while killing Jackson’s bill. He said hers was needed to balance the budget in a fair and equitable way.
Follow Tyler Bridges on Twitter, @TegBridges. For more coverage of the State Capitol, follow Louisiana Politics at http://blogs.theadvocate.com/politicsblog/.