In the week before the 2017 regular legislative session began, Gov. Edwards announced his new tax plan, which has received swift and widespread pushback from the Louisiana business community.
The crux of the plan is the corporate activity tax, or gross receipts tax, which would be imposed on any business with gross revenues of more than $1.5 million. The rate would be 0.35 percent and aims to replace the revenue that would be lost if the state doesn’t renew the temporary sales tax increase that was passed in 2016.
NFIB/LA is among those opposing this plan. The Greater Baton Rouge Business Report quoted State Director Dawn Starns, who pointed out the disproportionately adverse impact on small businesses: “If a small business is just starting out and has a bad year, you’re taxing them on receipts before they make profits. How do you justify that?”
In another report on the tax, Starns and other business leaders pointed out more problems.
“You are rolling out a tax plan that does not address a large portion of businesses,” Starns said. “And what about trial attorneys and their large settlements? How will that be treated? What about developers, homebuilders? They may have a high sales volume one year, but not the next. How does that really play out? There is no real modeling to show what that ends up looking like.”
Meanwhile, retailers and restaurants, which have high volumes, but low-profit margins, would be especially hurt by this tax model.
Jim Patterson, the vice president for government relations for the Louisiana Association of Business and Industry, also noted that pass-through businesses could be double-taxed and that corporations would have to inefficiently calculate both income tax and gross receipts tax.
