Senate committee approves proposal to eliminate business inventory tax in Louisiana

A plan to phase out the business inventory tax in certain Louisiana parishes was approved by a Senate committee with modifications. The tax generates significant revenue in some parishes but very little in others. The plan offers parishes a lump sum payment in exchange for giving up their right to collect the tax. Parishes have until July 2026 to decide whether to accept the buyout and can choose to keep taxing inventory at a lower rate if they opt out.

Lawmakers are also considering establishing a Local Revenue Fund to compensate parishes that give up the inventory tax. The fund would be funded by expanded sales tax on services, but this has faced resistance due to concerns about increasing sales tax rates. The plan also allows local governments to continue collecting tax on prescription drugs, which the state does not do.

The Landry administration believes eliminating the inventory tax will make Louisiana more competitive and attract business investments. While some lawmakers prefer to end the tax on prescription drugs, they maintain it as part of negotiations to increase revenue for local governments. Overall, the plan aims to streamline the state tax code and put Louisiana in a more competitive position economically.

Source
Photo credit www.nola.com