As of February 2011, the state has a total of 464 tax credits and other exemptions that were enacted by individual statutes.
The amount of CIFT credits claimed during tax years 2005 through 2010 resulted in a tax liability reduction of approximately $3 billion out of a total tax liability of $5.4 billion, an average revenue loss of approximately 55% due to CIFT credits. The amount of IIT credits claimed during tax years 2005 through 2010 resulted in a tax liability reduction of approximately $1.8 billion out of a total tax liability of $16.5 billion, an average revenue loss of approximately 11% due to IIT credits. This money may have been eligible for collection as tax revenue by LDR if these tax credits did not exist.
While determining the average amount of state revenue lost due to CIFT credits and IIT credits, we found that state law does not require agencies that administer tax credits and other exemptions to track and report their return on investment. As a result, it is difficult to determine the overall impact of CIFT and IIT tax credits on Louisiana. In addition, we identified four CIFT credits where only a few entities claimed a significant portion (greater than 50%) of the tax credit.
Robert Travis Scott, president of the Public Affairs Research Council of Louisiana, wrote a four-page letter to Donahue Thursday, expressing his hope that the commission identify low-performing or antiquated programs and reevaluate them. “The commission’s work might also give us a clearer picture of the actual cost of these programs,” Scott writes.
Scott says while many of the programs legislators will analyze are keeping the state competitive for business growth and may have a positive impact on the economy and job creation, there is a “serious lack of available information on some of these programs” and evidence that they don’t receive adequate follow-up and implementation after they are passed into law. In particular, he cites the recent controversy over the alternative fuels tax credit. He says it was not until April of this year that the Department of Revenue created rules to implement the program even though the 2009 specifically called for rules to be made.
We all know how that debacle played out.
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