CAT is not in the House

By Christopher Tidmore
Contributing Writer

When the legislature reconvenes on Monday following the Easter break, with just 53 days remaining, some legislators have begun to wonder if the administration is serious about passing its proposed commercial activity tax. A few House and Senate members have privately postulated to The Louisiana Weekly that the CAT might simply be a proverbial ‘stalking horse’ to renew the one penny in state sales tax passed last year.

Administration officials have repeatedly pledged to allow the five cents in state sales taxes revert to four cents when the penny expires in 2018. Governor John Bel Edwards himself has noted the regressive nature of last year’s sales tax hike, his clear intention to kill “the hated penny”, and has touted the CAT proposal as a means to both replace it and aid in plugging the $441 million estimated deficit in the next fiscal year.

The problem was that as late as Thursday morning members of the tax-writing House Ways and Means Committee were still waiting for the Administration’s finalized proposal for a commercial activity tax on gross receipts for companies with more than $1.5 million in receipts.

That’s not necessarily a problem. The Governor has until 6 p.m. on Wednesday, April 19th before the session’s deadline to introduce new bills expires. And as lapolitics.com’s Jeremy Alford noted, “There is a skeleton measure in House Bill 563 by Rep. Sam Jones, D-Franklin, that could be used in a pinch, but as of [last Wednesday] administration officials were still working with a number of different potential authors.”

Alford pointed to Ways and Means Chairman Neil Abramson, D-New Orleans frustrated comment, during last Wednesday’s meeting, “We don’t even have one of the big bills,” not corporate tax reform or CAT.

Edwards has not stopped since his initial speech opening the session in April 10 at the CAT proposal remains “the most significant part” to reform the corporate tax structure, his staff wants simply to get the details right.

The delay has caused mutters even amongst some of the Governor’s closest legislative supporters. As business groups rally to defeat CAT, and even some of his fellow Democrats express misgivings, some members have begun to wonder privately to this newspaper if the commercial activities tax might be quickly scrubbed in favor of renewing “the hated penny.”

In other words, when given the choice of either a sales tax at the wholesale-corporate level, or one at the retail level, Democrats might reconsider their opposition to renewing the penny, one of the few taxes the House GOP caucus has expressed a willingness to consider. (All tax increases or renewals require a constitutional two-thirds majority of both houses, giving conservatives an effective veto.)

Administration officials have pointed not only to the Governor’s repeated promises to allow the cent to expire, but have asked if the Republicans if they have an alternative. Neither the State House nor the Senate GOP leadership has presented a plan to both plug $1.3 billion “fiscal cliff” looming in 2018, and the $400+ million deficit as well.

The $800 million in revenues garnered from the one penny sales tax cannot do both. A commercial activity tax can. Staffers say, “Worry Not”; they’re just working out CAT’s path to passage.

This article originally published in the April 17, 2017 print edition of The Louisiana Weekly newspaper.