Louisiana Commercial Activity Tax Cannot Claw Its Way Out of Committee: Bill Voluntarily Deferred by Sponsor
The hotly contested new Commercial Activity Tax (“CAT”) proposal in Louisiana – H.B. 628 – may now have officially run out of lives.
After hours of debate over two days of hearings in the Louisiana House Ways & Means Committee, Governor Edwards’ (D) proposed CAT was voluntarily deferred by the bill’s sponsor, Rep. Sam Jones. The bill’s deferral came following a barrage of testimony against the bill from tax researchers, business and industry groups, and individual taxpayers, as well as a clear distaste for the bill by a majority of the Way & Means Committee members.
Despite efforts by the Governor’s administration to soften the effect of the CAT by eliminating its applicability to S Corporations and LLCs, there still remained a vocal concern from those testifying, and many Committee members, over the tax pyramiding effects of the CAT and the effect of the proposed tax on low-margin businesses in the State. Thus, according to comments made during the hearings, the CAT became a KITTEN, but it still had claws that could adversely affect taxpayers in this current economic environment.
While this does not mean the CAT has necessarily given up all of its lives, the general consensus around the Capitol is that the votes on the House Ways and Means Committee are not lining up in favor of the CAT.
A full copy of the now-deferred CAT bill can be found here.