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Can Tax Reform Still Happen During a Non-Fiscal Session?

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Louisiana’s 2022 Regular Legislative Session convened on Monday, March 14th. While this year’s session is non-fiscal in nature, the question still presents itself whether or not tax reform can still be accomplished during this non-fiscal session. The Louisiana Constitution prohibits legislation during non-fiscal sessions that levies a new tax, increases an existing tax, or legislates with regard to tax exemptions, exclusions, deductions, or credits. Fiscal sessions occur in odd numbered years (i.e. 2021) and non-fiscal sessions occur in even numbered years (i.e. 2022). While legislators are limited by these constitutional restraints, tax reform is not completely off the table. Tax legislation that is administrative or regulatory in nature can still be introduced and passed into law if the legislation adheres to the provisions provided by the Louisiana Constitution. Additionally, tax reductions are germane to a non-fiscal session.

During Louisiana’s 2021 Regular Legislative Session, which was a fiscal session, legislators set out to accomplish seven key tax reform items: streamlining the state’s sales tax collection system, eliminating the federal income tax deduction for corporate and individual income taxes, lowering the income tax rates, continuing to phase out the franchise tax, phasing out the inventory tax, centralizing the process to participate in the Industrial Tax Exemption Program (ITEP), and reforming the state’s severance tax. Of these seven items, Louisiana saw the passage of three key items through the legislative process: the elimination of the federal income tax deduction for corporate and individual income taxes, the lowering of income tax rates, and the phasing out of the franchise tax.

As we examine the bills that have been filed thus far for the 2022 session, it is evident that legislators have not given up on their tax reform efforts and are still working to check off the remainder of last year’s key tax reform items. Speaker Schexnayder has filed HB681 which is a reattempt at streamlining Louisiana’s sales tax system. Representative Bacala’s HB 438 would reduce the temporary sales and use tax rate from 0.45% to 0.35%. SB246 filed by Senator Allain, Chair of House Ways and Means Committee, is a constitutional amendment that would authorize parishes to exempt taxpayers’ inventory goods from ad valorem tax. The constitutional amendment’s companion bill, SB247, provides for the procedures for which the exemption can occur.  Representative DeVillier’s HB167 attempts to reduce the severance tax rate on oil over an 8 year period with an ending rate of 8.5% in 2030 while Representative McCormick’s HB716 attempts to phase out the severance tax on oil, certain distillate, and natural gas all together over an 8 year period. In terms of the process to participate in ITEP, we have not seen any similar efforts made yet to centralize the process.  However, we have seen efforts to put the Governor’s Executive Order parameters into the Constitution via SB151 by Senator Pope, which will solidify the current decentralized process.

Please reference the following complete list of tax legislation that has been filed thus far for Louisiana’s 2022 Regular Legislative Session.

SB12 (Reese) – Provides for an extension of the Competitive Projects Payroll Incentive Program.

SB24 (Fields) – To provide a rebate for elementary and secondary teachers providing full-time classroom instruction in this state.

SB28 (Allain) – Provides relative to state partnership audit adjustments.

SB41 (Reese) – Provides an extension of the sunset date for the Louisiana Quality Jobs Program Act.

SB42 (Ward) – Re-creates Department of Economic Development.

SB49 (Ward) – Constitutional amendment to reallocate severance tax to parishes for Parish Transportation Funds.

SB54 (Allain) – Provides for an automatic filing extension for individual income tax returns.

SB85 (Cortez) – Creates an individual income tax refund checkoff donation for Maddie’s Footprints.

SB87 (Cathey) – Provides relative to the capital outlay process.

SB95 (Allain) – Creates the multi-parish audit program for local sales tax.

SB129 (Morris) – Exempts certain infused or injected prescription drugs from local sales tax.

SB151 (Pope) – Constitutional amendment to provide for local governmental input in the Industrial Tax Exemption Program

SB173 (Reese) – Provides for program changes to the Louisiana Quality Jobs Program Act.

SB217 (Jackson) – Exempts the lease, rental, or purchase of tangible personal property or services by the Edward Via College of Osteopathic Medicine (VCOM) from local sales tax.

SB235 (Allain) – Authorizes parishes to contract with the Louisiana Sales and Use Tax Commission for Remote Sellers for the collection of local sales and use tax.

SB241 (Allain) – Provides for alternatives in lieu of payment under protest for certain ad valorem taxes.

 SB242 (Allain) – Provides relative to interest and penalties applicable to local sales and use tax

SB244 (Allain) – Requires uniform reporting by local sales tax collectors that are compensated based on cost of collection.

SB246 (Allain) – Constitutional amendment to authorize parishes to exempt inventory from ad valorem taxation.

SB247 (Allain) – Provides for procedures for parishes to exempt inventory from ad valorem taxation.

SB293 (Allain) – Creates a state sales tax rebate for the purchase of certain agricultural fencing materials by commercial farmers.

SB364 (Reese) – Provides for the rule-making authority of the Louisiana Tax Commission

SB371 (Harris) – Establishes an individual income tax refund checkoff donation for the University of New Orleans Foundation

SB389 (Reese) – Provides relative to the suspension of driver’s licenses for failure to pay taxes.

SB390 (White) – Provides incentive rebates for oil and gas exploration and production.

HB49 (Huval) – Authorizes the town of Henderson to levy a hotel occupancy tax

HB80 (Edmonds) – Restricts spending of state general fund revenue-direct to 98% of the official forecast

HB120 (Davis) – Re-creates the Department of Economic Development

HB140 (Echols) – Provides for a waiver of certain income tax penalties and interest

HB155 (Fisher) – Provides relative to property adjudicated to the city of Monroe

HB167 (DeVillier) – Reduces the severance tax rate for oil over a certain period of time and specifies the severance tax rate for oil produced from certain wells

HB230 (Bishop) – Extends the deadline for applying for rebates in the Louisiana Quality Jobs Program

HB287 (Willard) – Requires the annual occupational license tax levied on certain computer programming businesses to be set at a flat rate

HB288 (Landry) – (Constitutional Amendment) Provides for term limits for tax assessors

HB329 (Zeringue) – Provides for the payment of certain judgments issued by the Board of Tax Appeals for approved claims

HB331 (McFarland) – Provides relative to the application of the timber severance tax

HB350 (Hilferty) – Establishes a tax checkoff box for the University of New Orleans Foundation

HB372 (Romero) – Provides for the assessment of green house gas emissions reduction facilities for purposes of ad valorem property taxes

HB395 (Willard) – Removes the requirement that certain property owners annually certify income to receive the special assessment level for ad valorem property taxes

HB429 (Hilferty) – Establishes a state sales and use tax rebate for the purchase of construction materials by certain charitable organizations

HB436 (Tarver) – Authorizes a one-time rebate of a portion of state tax revenue to certain taxpayers

HB438 (Bacala) – Reduces the rate of the state sales and use tax

HB476 (Wright) – Places the Department of Economic Development within the office of the Lieutenant Governor

HB485 (Marcelle) – Provides relative to the collection of certain criminal fines, fees, and costs

HB599 (Beaullieu) – (Constitutional Amendment) To provide for a property tax exemption for certain veterans with disabilities

HB631 (Green) – To provide for certain changes or corrections of assessment by the tax commission

HB637 (Beaullieu) – Authorizes an assessor to collect a fee from certain parties requesting assessment rolls or lists

HB681 (Schexnayder) – (Constitutional Amendment) Provides relative to state and local sales and use taxes

HB716 (McCormick) – Reduces the rate of the severance tax levied on oil, certain distillate, and natural gas over a specified period of time

HB724 (Bagley) – Establishes a grant program for site development and improvement

HB741 (Wright) – Requires the Department of Revenue to accept virtual currency as a form of payment of taxes, licenses, fees, penalties, and interest due to the state

HB794 (Jordan) – Authorizes a rebate for certain costs associated with the purchase and installation of solar electric systems

HCR6 (McCormick) – Removes wind and solar farms from the Industrial Tax Exemption Program

The 2022 session is scheduled to adjourn on Monday, June 6th and only time will tell how much tax reform headway legislators will be able to accomplish during this non-fiscal session.

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