The Daily Advertiser: Tax reform tops Jindal's '13 agenda

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(Original Post)

BATON ROUGE — Gov. Bobby Jindal has picked tax reform as his top issue for the 2013 legislative session. But the form the reform will take is still being formulated.

Tim Barfield, secretary of the Department of Revenue and Taxation and leader of the Jindal administration tax reform effort, says the 468 tax exemptions that totaled $6.8 billion in tax breaks in 2010 make for a complex tax structure that is primed for simplification.

Jindal has said his goal is to "make our tax code fairer, flatter and lower for Louisiana families and businesses."

The Institute on Taxation and Economic Policy, a nonpartisan tax watchdog group, has listed Louisiana among the top 15 states with potential for major tax reform.

An institute report says, "The Governor's interest in tax reform is promising and the focus on fairness could mean that Louisiana's tax structure is less regressive in the future."

But it cautions: "The focus on revenue neutrality could mean that Louisiana isn't able to meet the needs of its taxpayers in future years."

Declining revenues have forced repeated budget reductions in the past five years.

Barfield says the complex tax system could play a large role in that problem.

"Simplifying taxes would help tremendously in estimating revenues," he said, because with so many exemptions, it's difficult for economists to properly predict revenues. "Exemptions make estimating that much more challenging."

Barfield said Louisiana has "a favorable tax burden" for industry. But, "while we have a low tax burden," taking advantage of it sometimes requires maneuvering.

An example: Louisiana does not have a state inventory tax. But local governments do. The state has a provision that rebates to businesses the amount of inventory tax they pay, but many businesses looking at the state as a prospect for location often don't realize it.

Barfield said he's looking for a way to encourage local governments to eliminate that tax, perhaps by increasing revenues shared with local governments in an equal amount that they would receive in inventory taxes.

The Institute on Taxation and Economic Policy's Meg Wiehe said state officials indicate they want to broaden the tax base and eliminate some exemptions, while keeping revenues neutral.

A legislative committee has been examining tax exemptions with an eye on which are no longer needed or are not performing well.

"Everything is on the table," Barfield said. "Personal income tax, corporate tax, property tax and sales tax. Everything is being looked at."

The governor's plan is to be rolled out in February, he said.

Nicholas Persac of The Daily Advertiser contributed to this story.