Alternative tax payment option for business stalls

    A pair of proposals aimed at streamlining payment by businesses in lieu of taxes, or PILOT, options to governments have stalled during the special legislative session. 

    The bills, HB23 and HB28, expand on Sen. Mark Abraham’s constitutional amendment passed through the regular session that would establish an ad valorem tax exemption where property owners would make a payment to the local government in lieu of paying taxes. That amendment is set to appear on the ballot this fall. 

    As part of Louisiana Mid-Continent Oil & Gas Association’s proposal, the two pieces of legislation were drafted to streamline PILOT options so local governments can drive economic development in their areas, says Tyler Gray, president and general counsel of LMOGA.

    HB23, a separate constitutional amendment still going through the legislative process, says that property that is subject to “an agreement for strategic investments to maximize parish and local economies” could make a payment to the local government in lieu of ad valorem taxes. Further, only properties that are being used for “new establishments” or expansions can be eligible for the option.

    HB28 specifically authorizes local government bodies to make the voluntary agreement with the taxpayer. The bill also dictates that the ad valorem tax exemptions be for no longer than nine years and that the payment be two-years worth of ad valorem tax.

    Gray says the benefits of the bills are two-fold; companies can save money in the long run while governments can receive a larger chunk of cash in the beginning. 

    “We think this is a good policy to drive economic stimulus,” Gray says. “There are still seven days left in the session, so there’s still an opportunity to move this thing along.”  

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