Louisiana Economic Development is committed to strengthening our state by promoting Louisiana’s positive business climate and by creating new jobs and economic opportunity for our people — all of our people.
Recent publicity by Together Louisiana referred to Louisiana’s Industrial Tax Exemption Program as a “gravy train” for corporations. ITEP is in fact a manufacturing incentive that brings good jobs to Louisiana. Manufacturing jobs in Louisiana pay significantly more, averaging $1,300 per week versus $850 weekly for all jobs. Over time, manufacturers invest more capital and make more purchases at small businesses than do other sectors.
Fifty years ago, Gov. John McKeithen used ITEP to attract companies and their high-paying jobs to the Mississippi River corridor spanning East Baton Rouge and the river parishes. Results from the “gravy train” continue to be enjoyed by Louisiana communities and are a reason why LSU engineering graduates receive starting salaries among the highest in the nation. The most heavily industrialized parishes in Louisiana are home to our best-funded schools and highest-paid teachers.
Louisiana is one of 39 states offering a property tax exemption for a new capital investment project. In 2016, five companies that sought the ITEP exemption are investing $30 billion — record levels of capital spending in our state — which is why the amount of exemptions granted also reached a record. Since 2012, companies have announced more than $135 billion in capital investment projects in our state.
At LED, we view this as success for everyone in our state. Recognizing this historic opportunity, Governor Edwards last summer sought to preserve ITEP as a key economic development tool while making some very specific and meaningful changes: namely, involving local governing bodies in the approval process; and improving the program’s value to the state by requiring companies to more clearly declare their pledged investment and net new job creation.
These changes are better for the state and they’re consistent with what competing states do. No other state allowed an automatic 100 percent exemption from taxes. Until Governor Edwards’ executive order, local governments had no voice in the approval of exemptions for their own parish or municipal taxes.
By providing meaningful incentives like ITEP for major investments, Louisiana is recognizing the value of compromise while remaining competitive with our neighboring states.
One key factor remains unchanged for Louisiana businesses seeking to expand or build new facilities. Third-party analysis shows that Louisiana still has one of the lowest effective tax burdens in the nation for manufacturers, especially compared to neighboring states like Texas and Mississippi.
When considering the entire picture of tax rates, tax exemptions and other incentives like Quality Jobs and Enterprise Zones, Louisiana continues to offer businesses an extremely competitive tax environment. Because of this, we remain well-positioned to retain our existing manufacturers, to attract new facilities and to expand our existing manufacturing base. That means more and better jobs for our people, which is something we can all rally behind.
secretary, Louisiana Economic Development