BATON ROUGE, La. (AP) — Louisiana's largest business lobbying group on Wednesday declared its opposition to Gov. Bobby Jindal's tax system rewrite because the plan would shift new tax costs to businesses.
The announcement by the Louisiana Association of Business and Industry dealt a blow to the proposal that Jindal has pitched as a boost for state economic development, business creation and job growth.
LABI President Dan Juneau said his organization, which represents 3,200 businesses across industry sectors, cannot support any proposal that "would be balanced on the backs of the business community."
"LABI's policy is clear: If the tax swap proposal is introduced as a net increase in business taxes or is amended during the legislative process to take that form, LABI will oppose it," Juneau said.
While that business organization announced its opposition, the Louisiana Oil and Gas Association declared Wednesday that Jindal's proposal would create more oil and gas industry jobs, though the association said it still was awaiting a final draft of the legislation.
Jindal proposes to eliminate state income taxes on individuals and businesses.
To keep the plan "revenue neutral," the Republican governor would eliminate some severance tax breaks, raise state sales taxes from 4 percent to 5.88 percent, and charge sales tax on an array of new services, including many that businesses rely upon: like accounting, architectural, engineering and janitorial services.
Jindal's leader on the tax overhaul, Tim Barfield, told lawmakers this week that the governor's proposal would move $500 million in tax costs from residents to businesses.
Lawmakers will decide the tax plan's fate in the legislative session that begins April 8.
Jindal said he's "not at all" worried about LABI's opposition.
"This tax plan is going to be good for Louisiana families at every level. It's going to be good for businesses in Louisiana," he said. He added, "The only people defending the status quo are those that have lobbyists, lawyers and others that have gotten loopholes and want to protect those loopholes."
While tax costs for businesses would grow, Barfield said companies would benefit from the increased stability and transparency that he associated with a shift from income taxes to sales taxes.
"Transparency's wonderful, but if you look through the crystal ball and see a huge tax increase, I don't think transparency excites the people who are going to be hit with this increase," said Juneau, whose organization often has been Jindal's ally on issues.
Don Briggs, oil and gas association president, said he's received assurances from the Jindal administration that oil and gas services would remain exempt from the new sales tax. He said the organization also has reached an agreement on how to shrink severance tax breaks, and he's satisfied it won't harm the industry.
Juneau worried the sales tax increase on companies would be even larger than the $500 million outlined by Barfield, because that was based on tax data from 2011. He said businesses also were concerned they could face other tax increases indirectly tied to the governor's proposal.
He said increased state sales taxes would make it difficult for local government agencies to raise and renew sales taxes at the local level. Juneau said that might make those agencies turn to property tax increases, and he said businesses pay more than 70 percent of the properly taxes collected in Louisiana.
Juneau suggested the governor needed to scrap his tax swap proposal and take more time to review ideas for tax reform. He said LABI does support the governor's proposal to consolidate local sales tax collections at the state level.
Asked whether he saw the current tax structure as a disincentive to business attraction as Jindal leaders have claimed, Juneau replied, "I don't know anybody who's gone to state officials, any organized groups before this came up and said, 'You know what? We need to drop everything we're doing and totally revamp the tax system.' I don't know that there's been that hue and cry for that."