§ 47:1517 — Tax exemption budget

§1517. Tax exemption budget
A. No later than the first day of March the secretary of the Department of Revenue
shall prepare and submit to the governor and the legislature a tax exemption budget in the
manner set forth in this Section.
B.(1) The annual tax exemption budget shall be published on the LaTrac website,
or any subsequent database that may replace the LaTrac system, and shall include the
following:
(a) Each tax exemption, its statutory citation, and its purpose.
(b) The revenue loss to the state caused by each tax exemption for the three
preceding years, the estimated revenue loss to the state caused by each tax exemption for the
current fiscal year, and the estimated revenue loss to the state caused by each tax exemption
for the ensuing fiscal year.
(c) The estimated cost of administering and implementing each tax exemption for
the three preceding fiscal years, the current fiscal year, and the ensuing fiscal year.
(d) The tax exemption budget shall also include the following:
(i) The number of businesses which receive each tax exemption, credit, exclusion,
refund, preferential tax rate, deferred tax liability, or rebate, hereinafter referred to in this
Subsection as the exemption.
(ii) The parish or location of each business which receives a tax exemption;
provided, that if fewer than ten businesses receive a particular tax exemption, the tax
exemption budget may group such tax exemption with another tax exemption which also has
fewer than ten businesses receiving it.
(iii) The information shall be displayed in a manner that identifies:
(aa) The industry group by North American Industry Classification System sector.
(bb) The number of taxpayers by industry.
(cc) The total tax burden by industry group by individual tax before the exemption.
(dd) The total value to each industry group for each exemption.
(ee) The total tax value by each industry group by individual tax of the tax
collections after the exemption.
(e) The items contained in Subparagraph (d) of this Paragraph shall be published to
the extent that the information is available to the department, on a schedule to be determined
by the secretary of the department, beginning with the incentive expenditures, and fully
implemented by the date of publication of the Fiscal Year 2018-2019 tax exemption budget
on or before March 1, 2020. The secretary shall ensure that the publication shall not include
confidential information.
(2) The tax exemptions in the annual tax exemption budget shall also be organized
in an additional opening schedule as follows:
(a) Agricultural/Rural: a tax exemption that pertains to a business or person being
located in a rural area; or, engaging in an agricultural trade/business.
(b) Business Environment: a tax exemption that encourages competitiveness with
other states by impacting the tax burden of business entities that engage in specific activities
that include holding or maintaining inventory or property in the state, using or deriving
benefit from water, electric power, energy or any other utility type resources, or buying,
leasing, renting or selling machines or equipment used for the production, modification,
creation or facilitation of tangible personal property in the state, or using consumables in the
manufacturing process that does not become a part of the final product, including the
following:
(i) Inventory Tax Ad Valorem.
(ii) Business Utilities Sales Tax.
(iii) Manufacturing Machinery and Equipment.
(iv) Direct Inputs and Consumables.
(c) Corporate Income Tax Formula: a tax exemption that is unique or specific to
Louisiana and relates to assisting, guiding or aiding a business entity in determining the
amount of its income for Louisiana tax purposes.
(d) Dealers and Vendors Compensation and Discounts: a tax exemption that
encourages either the timely filing of a return, report, form or document or the timely
payment of a tax, fee or other amount due.
(e) Educational Breaks for Educational Institutions: a tax exemption that pertains
to an entity that engages in a specified activity that provides or facilitates the act of learning,
or, an entity or institution who provides or facilitates learning.
(f) Educational Breaks for Individuals: a tax exemption that pertains to an individual
who engages in a specified activity that is beneficial to, or provides or facilitates the act of
learning.
(g) Incentives: a tax exemption that encourages a particular or specified economic
activity by modifying the tax burden of the economic activity or behavior that is taking place.
Categories of incentives include those that spur the hiring of employees by business or that
are administered by and through a contract with:
(i) Louisiana Economic Development.
(ii) The Department of Culture, Recreation & Tourism.
(iii) The Department of Environmental Quality.
(iv) The Department of Revenue, including those for Severance Tax (that is not a
part of the normal taxing scheme of other states).
(h) Louisiana Constitutional Mandates: a tax exemption outlined in the state
constitution that modifies the tax burden.
(i) Non-itemized Sales and Use Tax Exclusions and Exemptions: a sales tax
exemption that is not individually itemized on a Louisiana sales tax return before March
2016 and is therefore not assigned a value in the Tax Exemption Budget.
(j) Normal Tax Structure: an exemption that is commonly used or implemented in
other states; enacted to prevent double taxation; or used to prevent the taxation of direct
business inputs. The exemption could be mandated by the federal government, the state to
ensure a foreign, tribal, local, municipality or state entity addresses taxes owed to the state,
the federal or state government to ensure the protections of commerce across state lines, the
state government to determine the taxability of businesses when it incurs losses, or the state
government on activities that sever the state's natural resources in a manner that is not unique
to Louisiana and widely accepted policy among oil producing states, including the following:
(i) Federal Mandatory.
(ii) Intergovernment.
(iii) Interstate Commerce.
(iv) Net Operating Loss.
(v) Normal Severance.
(k) Personal Income Tax Formula: a tax exemption that assists, guides, or aids an
individual in determining Louisiana tax table income after determining Louisiana adjusted
gross income.
(l) Retirement, Disability, and Military: a tax exemption that modifies the tax owed
by individuals who receive money, including but not limited to wages and interest as a result
of this special status or position in life that is recognized by statute.
(m) Specialty Sales Tax Exemptions, including the following:
(i) Sales tax holidays.
(ii) Purchase of a specific item.
(iii) Purchase made by a specific taxpayer.
(iv) Activities of a specific group or organization.
(n) Specialty Income Tax Exemptions, including the following:
(i) Performance of a specific activity.
(ii) Purchase of a specific item.
(iii) Purchase made by a specific taxpayer.
(3) No statute, provision, exemption, exclusion, refundable or nonrefundable credit,
rebate or deduction listed in the categories outlined above shall be listed in more than one
category without a specific notation of doing such.
(4) The secretary may add additional categories to the additional opening schedule
as deemed appropriate and necessary.
C. The annual tax exemption budget shall also include an assessment of each tax
exemption based on the following criteria:
(1) Whether or not each tax exemption has been successful in meeting the purpose
for which it was enacted, in particular, whether each tax exemption benefits those originally
intended to be benefited, and if not, those who do benefit.
(2) Whether each tax exemption is the most fiscally effective means of achieving its
purpose.
(3) Unintended or inadvertent effects, benefits, or harm caused by each tax
exemption, including whether each tax exemption conflicts with other state laws or
regulations.
(4) Whether each tax exemption simplifies or complicates the state tax statutes.
D. The Department of Revenue is authorized to request from any state or local
agency or official any information necessary to complete the budget required by this Section.
Any such official shall comply with this request.
E. "Tax exemptions" means those revenue losses attributable to provisions of the
state tax statutes or rules promulgated pursuant to such statutes, which allow a special
exclusion, exemption, or deduction from gross income or sales or which provide a special
credit, a preferential rate of tax, or a deferral of tax liability.
F. The House Committee on Ways and Means and the Senate Committee on
Revenue and Fiscal Affairs, hereinafter referred to as "committees", shall conduct hearings
on the tax exemption budget every odd-numbered year, to be concluded thirty days before
the beginning of the regular session of the Louisiana Legislature. The committees shall
analyze and consider tax exemptions which have caused revenue loss to the state of ten
million dollars or more in any one of the last three fiscal years. From time to time, the
committees may report to the legislature findings or recommendations developed as a result
of the hearings.

Legislative History

Acts 1989, No. 836, §2, eff. July 1, 1989; Acts 1997, No. 658, §2; Acts 2011, No. 365, §1; Acts 2016, No. 592, §1, eff. July 1, 2016; Acts 2018, No. 667, §2.