Legislative Actions and Structural Changes in Budget and Tax Policies 2015-2016

The Task Force on Structural Changes in Budget and Tax Policy focused on significant legislative actions and structural adjustments in the 2015-2016 sessions. Major changes included expanding the sales tax base, revising corporate income tax definitions, proposing a constitutional amendment, and modifying personal income tax credits. Excise taxes and revenue stabilization funds were also addressed, aiming for fiscal balance and increased revenue streams.

• Legislative actions
• Structural changes
• Budget policy
• Tax policy
• Fiscal reform

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1. Task Force on Structural Changes in Budget and Tax Policy WHAT HAS HAPPENED IN 2015 AND 2016 LEGISLATIVE SESSIONS AND WHAT STRUCTURAL CHANGES NEED TO BE DONE

2. Changes Made or to be Made Major Expansion/changes of Sales Tax Base Expansion of sales tax base for limited amount of time Changes in definition of sales tax base to accommodate judicial finding Reworking of sales tax base to correct unintended consequences of changes made in first extraordinary session Changes in definition of corporate income and franchise tax Single factor apportionment Add backs transactions within an organization Market sourcing of services Change in applicability of corporate franchise tax Proposed Constitutional Amendment Re: elimination of federal tax deductibility as an exemption and flat rate of 6.5% Personal Income Tax Changes reduction of tax credit for Louisiana Citizens Property Insurance Reduction in Net Capital Appreciation exemption based on number of years Louisiana-based company has been organized in the state

3. Changes Made or To Be Made Excise Taxes Tobacco Liquor, Wine and Beer Tax Credits Inventory Ad Valorem Tax Credit Film Credit Other credits

4. Changes Made or To Be Made New and Expanded Revenue Stabilization Fund Constitutional Amendment Corporate income and franchise collections in excess of $600 million Mineral revenues between allocated to UAL and the stabilization fund Industrial Tax Exemption Program Governor s Executive Order Locals will be involved with decisions to grant ITEP, but will not have veto power Companies must demonstrate job creation or retention Applications for miscellaneous capital additions, required environmental upgrades, and new replacements for existing machinery will not be approved

5. Focus of Task Force Tax Changes personal income tax General sales tax Breadth of tax base, including services State and local administration Exemptions, deductions, and credits Property tax Local revenue sources Budgetary balance Funding UAL Assessment of Public Programs

6. Comparison Distributional Impacts Overall distribution of individual income tax and sales taxes on various income categories Looking at select taxpayers and asking how they now fare under tax system and how will they fare under proposed tax changes Comparison to other states Rankings as appropriate