Small business closed file

(The Center Square) – A Senate committee on Thursday advanced a tax rebate meant to help businesses affected by the COVID-19 pandemic response.

The bill’s author agreed to continue working on the proposal to reduce the amount of revenue state government would lose while better targeting the hardest-hit small businesses.

In the version discussed Thursday, House Bill 846 would give participating restaurants, hotels and retailers a rebate equal to 6 percent of the salaries of workers hired or rehired, as long as they hire at least five people and add at least $40,000 in total payroll.

Rep. Mark Wright, a Covington Republican, described it as a boost to businesses struggling amid the deliberate economic slowdown meant to control the spread of COVID-19. Joel Robideaux, the former state lawmaker who is part of a legislative task force focused on economic recovery, said one in five restaurants may never reopen.

“For many of our small businesses, this [upcoming year] is about survival,” Wright said.

But lawmakers said some of the smallest businesses might find the program too complicated for them to participate in, while big-box stores that are doing well would be eligible. The program probably would not stimulate job creation, because those decisions will be based on the need for employees, some speakers said.

And the impact to state finances is impossible to calculate because lawmakers don’t know how many businesses will participate, lawmakers noted.  

Also on Thursday, the Senate Committee on Revenue and Fiscal Affairs tabled a severance tax reduction for oil producers. House Bill 506 over several years would lower the state’s oil severance tax rate from 12.5 percent to 8.5 percent.

“This is just a small step in the right direction [to help the industry],” said Rep. Phillip DeVillier, the Eunice Republican who sponsored the bill.

Louisiana’s severance tax rate for oil is the highest in the nation. However, when all taxes on oil production are taken into account, Louisiana’s tax burden is in the middle of the pack, said Greg Upton with the LSU Center for Energy Studies. Upton also said the decline in production in Louisiana compared to states like Texas and North Dakota is driven by the production shale plays in those states, not tax differences.

The change would keep an estimated $112.6 million out of state coffers over five years, according to the Legislative Fiscal Office. DeVillier argued the loss would be greater without the tax reduction, which he said would stimulate more production.

Revenue and Fiscal Affairs Chairman Bret Allain said he would prefer to set aside the bill in hopes of a more “holistic” plan that would help the industry and protect the state’s bottom line. DeVillier suggested the state should eliminate its subsidy for film production to pay for the tax cut.

Staff Reporter

David Jacobs is a Baton Rouge-based award-winning journalist who has written about government, politics, business and culture in Louisiana for almost 15 years. He joined The Center Square in 2018.