Mississippi & Louisiana Legislative Update

By Steve Browning, CSA Lobbyist
Hayes Dent Public Strategies

Mississippi
The Mississippi Legislature completed its Regular Session earlier than normal this year. Much has already been written about the accomplishments of this Session, but one major success was the passage of Taxpayer Relief Act of 2016 and its phase out of the state franchise tax.

As many of you know the state franchise tax is a tax that businesses pay on their investments. Even if you have no state income tax liability, you likely pay a steep franchise tax to the state. The tax is typically assessed at $2.50 for every $1000 of capital invested in Mississippi. As you might expect this tax discourages investment.

Under the new law, the first $100,000 of taxable capital is immediately exempt from the franchise tax, and that exemption will remain constant throughout the phase-out period. This provision was not included in the original bill, and will likely serve to completely exempt many small businesses from the franchise tax in the first year.

Lt. Governor Tate Reeves successfully led an effort in 2016 to phase out this tax over a 10-year period, beginning in Tax Year 2018. This is very welcome news for business owners!

Additionally, the Legislature has convened a blue ribbon panel to conduct a comprehensive overview of the state’s tax structure, as well as the state’s spending, agencies and programs. Significant reform in state government may soon be on the way. Please keep your fingers crossed that another recession does not hit the national economy in the next five years and serious reform in Mississippi has an opportunity to become a reality.

Louisiana
The Louisiana Legislature concluded its work earlier this summer, too. Following two difficult special sessions and the Regular Session, many businesses, but specifically industrial businesses, were impacted by tax increases. Louisiana is facing a major budget shortfall due to a sluggish oil and gas sector. Off-shore production has slowed significantly due to low crude oil prices. Since 2015, the Louisiana Legislature has raised taxes on businesses by billions of dollars to balance the state’s budget.

In 2015, the Legislature amended the 100% “refundability” feature of the Inventory Tax credit (75% refundable/25% carry-forward). We are pleased to announce that the Legislature improved this credit during a 2016 second special session to make the credit 100% refundable for businesses that pay less than $500,000 in inventory taxes per year (bringing the credit law back to pre-2015 conditions for smaller business owners). Because of our strong advocacy efforts in 2015 and 2016, we are hopeful lawmakers understand that further changes to this tax credit will upset building material dealers in Louisiana.

There were other tax code changes that impacted most businesses very broadly. Please go to this website for a detailed breakdown of all recent tax changes: http://labi.org/assets/media/documents/2016_Session_Outcomes_Final_reduced.pdf

CSA and our Louisiana dealers were also successful in defeating House Bill 334, legislation that would have negatively impacted your lien rights. HB 334 was supported by the AGC of LA. This legislation passed from the House by a narrow margin and was ultimately defeated in the Senate Committee on Commerce in a recorded vote. Special thanks to all CSA members who called, wrote and met their lawmakers to voice opposition.