Cornerstone of governor's tax plan faces scrutiny, criticism in House committee

BATON ROUGE, LA (WAFB) - State lawmakers took turns riddling holes in one of the governor's key tax proposals Monday, putting the fate of the governor's overall reform package in jeopardy.

The House Ways and Means committee – the first stop for tax bills at the capitol – spent much of the day debating the so-called "Corporate Activity Tax (CAT)."  Many have already called the proposal "dead on arrival."

"It adds another layer of complexity to an already complicated tax system," said committee member Rep. Barry Ivey, R-Central.

The "CAT" would apply to businesses, taxing how much they bring in each year before expenses like payroll are deducted. Smaller businesses could pay as little as $250 each year, while some larger businesses could end up forking over several thousand dollars.

Republicans on the panel, opposed to more taxes, worried it would hinder job creation in the state.

"I just don't see this as a fair tax, and I don't see this as a way to promote business growth," said Rep. Dodie Horton, R-Haughton.

"You're taxing businesses that are barely showing a profit, or are losing money now," said Rep. Alan Seabaugh, R-Shreveport. "Does that strike you as being counter-productive, like maybe you would chase businesses out of the state if you impose this?"

Rep. Sam Jones, D-Franklin, who is sponsoring the bill on the governor's behalf, asked lawmakers to give his bill a second look, saying they should put individuals over business.

"Those folks have no lobbyists, except you and me," said Rep. Sam Jones, D-Franklin, who is sponsoring the "CAT" bill.

The governor's office says most businesses across the state currently use exemptions to get out of paying the corporate income tax. Describing that as "unfair," the governor pitched the idea as a way of forcing them to pay something.

Generally speaking, the governor's plan calls for increasing taxes on business via the "CAT" proposal, in exchange for reducing the sales tax by a penny and lowering income tax rates on both businesses and individuals.

The committee is expected to vote on the proposal Tuesday.

Copyright 2017 WAFB. All rights reserved.