Under the Governor's proposed tax reforms low-income filers will be eligible for a rebate and some business incentive programs will see changes. The state House Ways and Means Committee met again Tuesday to discuss details on these elements of the proposal.
The Governor wants to eliminate the personal income tax and the corporate income and franchise taxes. Under the proposal, the sales tax will grow to make up that revenue.
The Family Assistance Rebate Program
The governor is proposing a rebate program for low-income individuals and families to make up for the income they would have lost under the switch. The Department of Children and Family Services will be responsible for the low-income rebate program if the Governor’s tax reform package passes.
The Louisiana Department of Revenue says nearly 650,000 families will be eligible for the Family Assistance Rebate Program, or FARP, and DCFS already has the infrastructure to accommodate them. Sam Guillory, with DCFS, says his department already serves over 400,000 of those with food stamps, or SNAP. “It’s not a problem because the cards that we distribute benefits on," Guillory said, "They currently can distribute cash and SNAP benefits on the same card, so we’d have to add a third category to distribute this, but that’s doable also.”
The sales tax intrinsically places more tax burden on the low and middle classes than the income tax -- the revenue department says FARP will combat the sales tax regressive nature.
Economic Development Program Changes
One of the programs to see changes is the Movie Picture Investor Tax Credit. It provides tax breaks to filmmakers who shoot their movies in Louisiana. According to Secretary Stephen Moret, the changes will limit breaks for money that’s not coming back to the state.
“They’re earning those credits fair and square according to the law as it stands today. I’m not suggesting fraud or anything like that," Moret said. "It’s just that, an actor gets paid 10 mil for a film, and they don’t live in LA, that money’s not going to get spent here. I’m not saying it’s zero, but it’s obviously a very small portion in the vast majority of cases.”
Officials say tighter restrictions on the Enterprise Zone incentive program will redirect it towards its original goal of spurring growth in distressed areas of the state. Incentives for big box retailers will see new restrictions in hopes that small businesses will see growth.
Tax reforms will come before the legislature again on April 4.