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Inventory Tax: Unable to 'Cut a Deal'

The job of this task force all along was to identify and push forward those things that would make the local government whole – in lieu of the inventory tax,” said the chairman of the SCR 6 Task Force, state Senator Bret Allain, at the team's final meeting last Friday.

The group has been grappling with the thorny problem of inventory tax, and Allain acknowledged that they've not been able to solve it.

We weren’t able to come to a conclusion or cut a deal, but at least we put everything on the table.”

Local governments collect the inventory tax from business, which business tolerates because the state refunds what those companies paid the locals.

Representatives of local government, like Timmy Roussel with the Police Jury Association, have taken a hard-line stance.

We don’t believe it’s a local problem,” Roussel stated. “We believe it’s a state problem.”

It’s easy to say it’s not the local government’s problem, but it quickly could become the local government’s problem,” Allain responded. “The state does fund the credit and the credit may have to go away. We cannot afford to continue doing everything we’ve been doing in the past and not balance the budget of the state of Louisiana.”

Task Force members discussed the options one final time – options which include making the Industrial Tax Exemption Program (ITEP) purely local, so that local governments can decide whether or not they want to offer tax exemptions. They also talked about replacing the inventory tax with other revenue streams.

Replacing the inventory tax would be easier with property tax,” opined LSU economist Jim Richardson. “It’s sensible.”

But that would mean raising property taxes across the board – on homeowners as well as businesses. It also means tweaking one of Louisiana's so-called “sacred cows” – the homestead exemption.

Lawrence Chehardy with the Louisiana Tax Commission reminded the task force members that a change like that would have to be taken to the voters, too.

Will the voters of this state vote to raise their taxes so that Walmart can pay less taxes?”