Monday, November 22, 2005
By MARSHA SHULER
Capitol news bureau

Meanwhile, senators passed other bills providing sales and franchise tax breaks for Louisiana firms with hurricane business disruptions.

Differing sales tax "holidays" have been floated throughout the 17-day special session.

Blanco proposed one day of shopping free from the statewide 4 percent general sales tax. The House approved three days and the Senate six days.

The House derailed the six-day plan on Monday, sending it to a committee that wasn't scheduled to meet before lawmakers end the session by 6 p.m. today

The Senate later expanded the House's three-day plan into four days. The House rejected that version, sending it to a conference committee to iron out differences between the two chambers before the special session ends.

"In all the bills I've ever handled, this is the only bill everybody had an opinion on," said Rep. Billy Montgomery, D-Haughton, author of the sales-tax proposition.

Some wondered what all the discussion was about.

"This is a lot to do about nothing," said Sen. Don Cravins, D-Opelousas.

"The people this bill is designed to help; most of them don't have any jobs, they are out of state. And even if they buy a TV, they have nowhere to plug it in," Cravins said.

Cravins said state officials have still not discussed how to get people back to New Orleans with the jobs and the housing they need. "We ought to be talking about some kind of permanent relief," he said.

"You can go home and be proud you gave people a tax-free holiday. Who cares?" Cravins said.

The Senate-passed plan the House nixed would have established a Dec. 15-18 tax-free period on purchases up to $10,000 each. It would also have allowed small businesses to get sales tax refunds on some purchases if they received prior certification of eligibility through the state revenue department.

Retailers could have opted not to participate.

House Bill 42 by Montgomery -- the bill the Senate altered -- provided a three-day break on purchases up to $2,500 each -- a less-expensive proposition for the state. Small businesses would have been able to participate without having to wait.

"The cost is going to be a problem," Montgomery told the House as he urged rejection of the Senate plan. Montgomery said initial estimates indicate the tax break could cost more than $30 million. Blanco's one tax-free day would have cost $7.8 million.

Montgomery also said there are technical problems with the Senate changes, including different dates for the "tax-free shopping" in different sections of the bill.

Rep. Troy Hebert, D-Jeanerette argued that cost should not be a factor. He said the Legislature approved more than $50 million in tax breaks for "big business."

The debate over the consumer sales tax break took up most of the Senate's afternoon session. Senators debated what level of break to grant, whether to include small businesses, what days to make tax-free and whether the four-day shopping was actually a compromise.

Sen. Derrick Shepherd, D-Marrero, told senators the four-day tax break he pushed would cost the state treasury about $11 million.

Sen. Nick Gautreaux, D-Meaux, got senators to go along with moving the tax-free shopping days closer to "blue-collar" worker pay day in the middle of the month. The original Dec. 9-11 dates became Dec. 15-18 under Gautreaux's change.

Gautreaux also got senators to go along allowing some small businesses to get a sales tax rebate for purchases they make during the period. They would have to be pre-certified by the state Revenue Department as eligible. That's a sticking point for the House.

Meanwhile, the business tax breaks approved Monday by the Senate included:

• House Bill 39, which would exempt from sales tax the purchase of manufacturing machinery and equipment to replace hurricane-damaged equipment. The exemption would stay in effect through June 30, 2007. It would mean a $2 million loss in tax revenues in the current budget year and a $4 million hit next year.
• House Bill 41, which would provide a corporate franchise tax break for corporations whose businesses suffered major disruptions as a result of hurricanes Katrina and Rita. During the current year, it would mean a projected $12.9 million revenue loss to the state and a $43.5 million loss over a five-year period.
• House Bill 40, which would cap the state sales tax on natural gas and electricity costs to certain industries. The bill would reduce from 3.8 percent to 3.3 percent the rate from Jan. 1 to June 30, 2009. The Senate amended the measure to specifically help the wood products and pulp and paper industry.

HB39 went to the governor's desk for signing into law. HB40 and HB41 are in conference committees to work out compromises with the House.

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