Despite the changes made to the state’s industrial tax exemption program by Gov. John Bel Edwards, the core of the exemption remains—companies will still be able to apply for a 100% exemption on local taxes for up to 10 years, the head of Louisiana Economic Development is stressing to businesses.
“Our ability to compete for and win projects has not changed at all,” says LED Secretary Don Pierson Jr. in a statement.
The industrial tax exemption program allows businesses to obtain a 100% exemption on local property taxes on new purchases for buildings and equipment. The program is overseen by the state Board of Commerce & Industry.
Edwards announced Friday an executive order that makes two substantive changes to the popular tax exemption: local parish governments must have a seat at the table during discussions about exempting local property taxes—including how much would be exempted—and businesses must show job creation or job retention to merit the exemption.
Pierson says he thinks both changes are “fair” and that “both the local governance and job requirements align with LED’s mission of cultivating jobs and economic opportunity for the people of Louisiana.”
“With the governor’s executive order, we will secure a stronger relationship with our regional and local economic development organizations and with our local governing boards by working more closely with each of you on significant projects,” Pierson says in a statement.
But Louisiana Chemical Association President Dan Borné says Edwards’ executive order potentially puts some major projects in limbo and causes concern for how long the new process could take.
“Since nearly 70% of all industrial tax exemption contracts in force are related to Louisiana chemical manufacturing, we are looking forward to working with the governor and the board to clarify the changes as soon as possible,” he says.
A request for comment from the Louisiana Association of Business and Industry on its position on the executive order was not returned as of this morning’s deadline.
Borné notes other changes to tax incentives and exemptions that have been advantageous to capital intensive business and industry—such as “essentially repealing the inventory tax by setting up a reimbursement mechanism;” removing the sales and use taxes on manufacturing equipment and machinery; and repealing the sales and use tax on natural gas and business utilities—have also been substantially altered since they were enacted.
“The sum total of public policy decisions already made, the specter of major changes to the (industrial tax exemption) and the uncertainty about Louisiana’s revenue and fiscal future will make tougher all our efforts to attract to Louisiana high-paying jobs connected to new and expanded capital investments,” he says.
The governor’s executive order came the same week Together Louisiana, a collection of religious and civic organizations, issued a report criticizing the program for being a “gift” to businesses, and not a true tax exemption. The report showed the exemption would cost local governments $16.7 billion in property taxes over the next 10 years if changes were not made.
