The Landry administration and state legislators have pared back numerous tax credits over the past year.
But lawmakers are moving forward with plans to keep alive, at least temporarily, a tax break that primarily benefits oil and gas and chemical companies.
The proposed one-year extension of the credit for property taxes paid on business inventory would cost the state treasury $200 million over three years, according to a legislative analysis.
That tax expenditure is equivalent to awarding one-year raises of $2,000 to teachers and $1,000 to school support staff.
Neither the sponsor, of House Bill 383, Rep. Ken Brass, D-Vacherie, nor business lobbyists have said retaining the tax credit for at least another year would lead to additional investment and job creation.
While speaking in favor of the bill, Brass and the lobbyists said it would give businesses “additional runway” to prepare for the tax credit’s elimination.
The inventory tax and inventory tax credit are convoluted. Under the current system, parishes levy a property tax every year on business inventory in the parish. Businesses pay the tax but then turn around and receive a tax credit for that payment from the state.
As a part of a wholesale revision of the tax code in November, legislators and Landry repealed the inventory tax credit as of July 1, 2026. But that was supposed to happen in conjunction with passage of a proposed constitutional amendment that would give each parish the right to opt out of the tax in exchange for up to $15 million to make up for the lost property tax revenue.
Voters on March 29 upset those plans when they rejected that amendment, leaving the inventory tax in place but the tax credit with the 2026 expiration date.
Rep. Daryl Deshotel, R-Hessmer, has revived the proposal with House Bill 365 and House Bill 366. These measures would let voters statewide decide whether to give parishes the right to ditch the tax. Both bills are before the Senate and could be heard as soon as Sunday.
Eliminating the property tax on business inventory has been a longtime goal of business interests but parishes have resisted the idea because of the tax revenue they would lose. Deshotel’s legislation – if approved by voters – attempts to address parish concerns.
If voters approve the constitutional amendment, the Landry administration believes that about 40 of Louisiana’s 64 parishes would repeal their inventory tax.
The credit is worth 100% for tax payments up to $500,000 and 75% for payments above $500,000. So if a company pays $100,000 in inventory taxes to a parish, the company then receives a $100,000 credit on those taxes from the state.
Tax experts have noted for years that having state taxpayers cover so much of the payment gives parishes and businesses little incentive to reduce the tax.
“This idea of us paying back people who pay taxes is kind of ridiculous,” state Sen. Jay Morris, R-Monroe, said when Brass’ bill was before the Revenue & Fiscal Affairs Committee on Wednesday. Morris is the only lawmaker who has criticized the scheme at any stage when they have been considering HB383.
Morris also noted that industrial businesses typically pay only 20% of their property taxes under the Industrial Tax Exemption Program, “where other businesses have to pay 100% of their property taxes.”
Big businesses received a big reduction in their taxes last year with the elimination of the corporate franchise tax and a flattening of the corporate income tax rate.
Brass’ bill initially sought to extend the inventory tax credit for 10 years, but when his bill was before the House Ways and Means Committee, the first step in the legislative process, Rep. Julie Emerson, R-Carencro and the committee chair, got the panel to reduce the extension to three years.
The committee then approved HB383 without objection, and it passed the House, 98-4.
When it then reached the Senate Revenue & Fiscal Affairs Committee, the panel’s chair, Sen. Franklin Foil, R-Baton Rouge, got his committee to reduce the extension to one year. The payouts will continue over two more years because companies can allow a portion of the tax credit to be paid in later years.
