A bill to phase out Lousiana’s personal income tax over 10 years at a cost of more than $5 billion a year of lost revenue was approved Monday by the House Committee on Ways and Means.
The measure, which now goes before the full House, is a re-write of a Senate bill that originally wiped out both the personal and corporate income taxes.
However, the Senate bill ultimately was amended to call only for the creation of a committee to study the repeal of both taxes.
Sen. Rob Marionneaux, D-Grosse Tete, the author of SB 259, said he approved of the House amendments to move forward with repeal of the personal income tax and push the original effective date back a year.
Under the House’s version, the personal tax would decline 10% a year, beginning Jan. 1, 2014. It also provides for a study committee.
Rep. Hunter Greene, R-Baton Rouge, said the move to begin the decade-long phase-out of the personal income tax in 2014 rather than 2013 would give the Legislature time to consider the study committee’s report on the effect of the tax repeal.
A report by the Legislative Fiscal Office said the 10-year phase-out would cost the state $120 million in fiscal 2014 and $5.4 billion in fiscal 2024 when fully implemented.
Marionneaux said the repeal could be paid for by removing some of the tax exemptions and credits provided by past Legislatures that cost the state a total of $7.1 billion a year. He did not target any specific exemptions.
The bill requires the study committee to submit a report to the governor and Legislature by Jan. 6 showing how the budget could be balanced and essential services maintained without the tax revenue that would be lost.
The amended bill suggests 26 cost-cutting moves, most of which came from a December 2009 report by a government streamlining group chaired by state Treasurer John Kennedy.
If the full House votes for the amended bill, it would be sent to the Senate for concurrence or subject to negotiations through a conference committee.