With the House Ways and Means committee set to take up the cornerstone of Gov. John Bel Edwards’ budget stabilization plan—the commercial activity tax—today, the Louisiana Association of Business and Industry recently sought feedback from its members on the proposed tax.
“Their comments have been startling,” LABI President and CEO Stephen Waguespack writes in a column published in the organization’s latest newsletter. “Gross receipts taxes are often compared to an expanded sales tax, which applies not only to the final sale but to all transactions including intermediate business-to-business purchases of supplies, raw materials, services and equipment.”
Originally pitched at a rate of 0.35%, Edwards’ tax proposal was originally projected to raise between $800 million to $900 million annually for the state. But with criticism mounting and the tax viewed as being dead on arrival, the Edwards administration tweaked the tax plan to address business concerns and bring in about half of what was originally projected.
Employers, whom LABI sought anonymous feedback from, indicate that the tax would be detrimental to their business, with one employer calling the potential impact of the CAT tax “devastating.”
“‘Most of our competition is from other states and this CAT tax on us will make us uncompetitive in an extremely competitive market,” the unidentified employer says. “We have already had a small layoff this year and are struggling to make enough sales to keep our people employed.”
“These are real comments, from real Louisiana people who are paying federal, state, and local taxes and trying to invest, hire and grow in the state they love,” Waguespack writes. “They are tired of getting blamed and targeted for problems they did not cause. They are not big companies and they are not partisan or political. This is their voice. It is time to listen to their message.”
