SHREVEPORT, La. (KSLA) – A special legislative session on tax reform will be held in Baton Rouge in November, and the film tax credit could be on the chopping block.
HOW THE TAX REFORM PLAN COULD IMPACT YOU
Richard Nelson with the Louisiana Department of Revenue (LDR) says this is a comprehensive tax reform package that the governor has proposed, and will impact most people in the state. Most will see more money in their paycheck, he says. Part of the proposal also involves eliminating sales tax on prescription drugs.
The plan involves raising the standard deduction from $4,500 to $12,500. The idea is that over time, as the state grows, the state would reduce the single tax rate to 3%… or even lower.
Louisiana currently has 225 different sales tax exemptions; this plan looks to eliminate some of those. Gov. Landry wants to see more services taxed, such as dog grooming, landscaping, car washes, and other “luxury” services. Nelson says the idea is to tax people’s preferences rather than necessities.
“The idea is instead of taxing people’s labor and their success, we’d rather tax their choices, and this is something we’ve seen be successful in other states like North Carolina, where they had significant tax reform and that really turned them around and let their state really take off,” said Nelson.
Meanwhile, the film tax credit is also in jeopardy. Nelson says the state gives away around $180 million per year for that credit. He says this plan looks to phase out those credits, exemptions, and incentives. He says this will allow the state to have one of the lowest tax rates in the country for income tax and corporate income tax. This could all happen as soon as the middle of 2025, Nelson says.
“There’s 225 sales tax exemptions. There’s even more credits and incentive programs too, and so we’re really looking to phase out a lot of those and the film credit really would be one of them that I think we’re looking at phasing them out by kind of middle of next year,” Nelson explained.
Representative Tammy Phelps, who represents District 3 (Caddo Parish), says she has always been of the mindset that the state can’t move to having no income tax like other states because many of them started that way, but since historically Louisiana has not been that way, it would take time to move there gradually to ensure the state has the revenue it needs.
Phelps also says the state can’t attract more businesses without “putting its money where its mouth is” when it comes to education.
And Senator Adam Bass, who represents District 36 (Bossier and Webster parishes), says they’re still in the early planning stages of this proposal, though they’ve been hearing ideas for months. He says ultimately, the plan looks like a shift to a more sales tax oriented model rather than an income tax oriented model. However, he says he’s not in favor of a consumption tax, meaning the more you consume, the more you pay. The goal, he says, is to attract more businesses to the area and employ more people in order to stop the problem of more people leaving the state rather than coming in.
“I do think that a consumption tax would be more fair. The more you consume, the more tax you pay. The less you consume, the less tax you pay. I think that’s the fairer tax, but as far as how that would affect them, we’re going to have to wait ‘til longer in the process where we get more information on the plan,” Bass said.
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