Elephant In The Room: Inventory Tax

Sep 26, 2016

After a one month reprieve due to the flooding, the Tax Structure Task Force is preparing the draft of their report -- now due October first.  

Audio Pending...

They’re discussing some small details, like itemized tax deductions for gambling losses:

“Do we lose money on that or do we net gain money on that?” Barry Erwin of the Council for a Better Louisiana wondered.

They’re even looking at items like sales tax on pacemakers.

“Medical devices are taxed at the local level,” state Revenue Secretary Kimberly Robinson stated.

“And the rate of tax would be what the hospital paid for it, not what they charge the patient, is that correct?” Lake Charles Mayor Randy Roach asked, for clarification.

But when it came to one of the big problems -- the inventory tax – the suggested action of a cut to the credit didn’t go over well.

“My biggest problem with the idea of just going to, say, a 50-percent rate on the inventory tax credit is that it’s not really a reform proposal,” Public Affairs Research Council director Robert Travis Scott told his fellow task force members.

“I don’t recall that there was a consensus of the Task Force that we would go to 50-percent,” Commissioner of Administration Jay Dardenne said.

State economist Dr. Jim Richardson defended his suggestion –sort of.

“Reducing that credit to 50-percent I don’t think is unreasonable.”

“I’m not even sure where that number came from,” tax attorney Jason DeCuir interjected.

“It is not a number that we can argue is scientifically derived,” Richardson admitted. “You have to put a number down there to start the conversation rolling. I put a number down there.”

But DeCuir urged the panel to tackle local reliance on the inventory tax, as well as the state’s indirect support of local government through refunding the tax to the businesses that pay it.

“I think if we just say, ‘Let’s reduce the credit and we’ll come back and have a serious conversation’ – we know how this building works – that doesn’t happen. And I think we need to address it holistically now,” DeCuir insisted.

There followed some talk about another task force that’s supposed to be looking at the issue, though that group is waiting to meet till after this Tax Structure Task Force submits its report. So even though this task force meets several times next week, inventory tax may remain the elephant in the room.