Good news for Louisiana business owners: The commercial activity tax (CAT) is dead.
As originally proposed, a 0.35 percent CAT, or gross receipts tax, would have been imposed on any business with gross revenues of more than $1.5 million, with the goal being to replace some of the $1.3 billion in revenue that the state would lose after the temporary sales tax ends in 2018. The proposal, House Bill 628, was later amended to reduce the impact on businesses, thereby reducing the revenue projections to $288 million annually from $416 million annually. However, it wasn’t enough to earn support from the House Ways and Means Committee, and bill sponsor Rep. Sam Jones pulled the proposal.
Numerous business groups, including NFIB/LA, testified against HB 628. State Director Dawn Starns noted that it would discourage small business growth, while other groups mentioned the disproportionate impact on businesses with high receipts but small margins as well as a nontransparent hit on consumers.
In the wake of HB 628’s demise, discussion picked up surrounding another tax proposal: House Bill 648, which would impose a new “Louisiana Business Tax” on corporations’ gross profit margins. Under the proposal, corporations would pay a flat income tax of around 2 percent, and in exchange, the corporate income and franchise taxes and all corporate tax exemptions would be eliminated. However, debate about this proposal has since been delayed because the bill’s author, Rep. Kenny Havard, pulled it to continue tweaking it.
