Estimates for Edwards’ business tax plan plunge
Changes that Gov. John Bel Edwards made to his business tax plan in hopes of lessening criticism cut in half the estimate of what the tax will raise, making his budget-stabilizing tax package hundreds of millions short of what he wanted to generate.
The Associated Press reports the Edwards administration expected the tax to bring in $800 million to $900 million a year when the Democratic governor first introduced a plan to tax companies’ gross receipts, essentially taxing their sales without accounting for profit margins or expenses.
But the administration tweaked the proposal before it was filed to respond to complaints that a gross receipts tax would hit certain businesses too hard.
With new carve-outs for certain businesses, Revenue Secretary Kimberly Robinson says recalculations show the bill would drum up an estimated $400 million annually for the state treasury.
She’s not expecting the figure to stay that low. The Edwards administration wants lawmakers to tweak the tax further, boosting the estimate to $550 million.
Either way, the gross receipts tax, called a commercial activity tax by the governor, would raise hundreds of millions of dollars less than originally anticipated as lawmakers on the House tax committee consider the idea next week.
“I’m still confident that we’re going to get there. It may take more pieces than we initially looked at. But we’re still working,” Robinson tells The Associated Press.
Edwards is pushing a tax overhaul that aims to end repeated budget gaps by more heavily taxing businesses. His tax package was intended to replace $1.3 billion in temporary taxes set to expire in mid-2018, while also raising another $400 million for next year’s budget the governor wants to spend on the TOPS college tuition program, K-12 education and other items.
The official projection of what the tax would raise is being developed by the nonpartisan Legislative Fiscal Office, but using similar data that Robinson’s department used.