DALLAS — A legislative review of Louisiana’s lengthy list of tax-exemptions and credits cannot be seen as an opportunity to raise revenues, a top state economic development executive said Monday.
The Revenue Study Commission, which held its opening session Monday, was established by the 2012 Legislature to look into the extent that tax-exemptions harm state revenues. Rep. Joel Robideaux, R-Lafayette, will chair the commission.
The 14-member panel will report its findings and recommendations to the 2013 Legislature by Feb. 1, two months before the session begins.
Jason El Koubi, assistant secretary at the Department of Economic Development, said Gov. Bobby Jindal’s administration believes that tax brackets, credits and exemptions should be viewed as a part of the state’s overall revenue system.
“We view any changes that are made should be offset in some way so that the net change is budget neutral and not an attempt to raise taxes,” he said.
“We’re look at this as an opportunity to increase our competitiveness,” El Koubi said. “We’re open to this review of the tax code to make it fairer, flatter and lower.”
The Department of Revenue said over 400 tax-exemptions, rebates, deductions and preferential calculations cost the state $4 billion in lost revenue in fiscal 2011.
The department’s report said the state collected $2.7 billion in sales taxes in fiscal 2011 and lost $1.4 billion through exemptions. Individual tax collections totaled $2.4 billion in fiscal 2011 but would have been $1.1 billion higher with no exemptions. Corporate income tax collections of $198 million were offset by exemptions totaling $1.5 billion.
El Koubi said the actual cost is $6.8 billion when constitutionally dedicated revenues are included.
He said only 5% of the exemptions are economic development incentives. Sales tax exemptions account for 37% of the exemptions, 27% are related to the personal income tax and 24% are related to the corporate income and franchise taxes.
His department manages only $364 million of the business tax incentives, El Koubi said, and more than half of the total is paid out through the state’s feature film production program.
Greg Albrecht, chief economist for the Legislative Fiscal Office, said estimating revenues is a difficult task, with lots of variables, and is subject to overall changes in the national and world business cycle. Legislative changes in the tax code make the job even harder, he said.
“State tax collections are rarely well behaved,” Albrecht said.
The Revenue Estimating Conference, which certifies the anticipated revenues the Legislature can appropriate, does an admirable job of predicting tax collections, he said.