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Cornerstone of the governor's tax reform plan shelved

Louisiana State Capitol (Source: WAFB) Louisiana State Capitol (Source: WAFB)
BATON ROUGE, LA (WAFB) -

Facing pushback from Republicans and business interests, a key part of the governor's tax reform proposal was shelved Tuesday.

After a two day hearing, Rep. Sam Jones, D-Franklin, voluntarily deferred the "Corporate Activity Tax," which he had sponsored on behalf of the governor. The so-called "CAT" had even generated concern from some of the governor's own allies.

The bill's failure puts a major dent in the governor's over-all tax reform plan, which generally called for increasing taxes on businesses in exchange for reducing taxes for most Louisiana residents.

After the bill was deferred, the governor pointed the finger at House leaders, saying during a press conference that it was now their turn to propose an alternative idea.

"Now it's incumbent upon the legislature, particularly House leadership, to unveil a plan. They haven't done that yet. And of course it appears to me there ought to be a lot of common ground between their approach and our legislative package, " Gov. John Bel Edwards said.

The "CAT" would have taxed how much businesses bring in each year before expenses like payroll are deducted.

The governor proposed the plan as a way, he said, of making sure businesses pay their "fair share." Most businesses do not pay the income tax in Louisiana, according to the governor's office. The "CAT," the governor said, would ensure that they pay something.

On Monday, Republicans on the House Ways and Means committee - the first stop for new tax proposals at the capitol - panned the idea as too complicated. Others expressed concern it would hinder job creation.

“I just don't see this as a fair tax, and I don't see this as a way to promote business growth,” said Rep. Dodie Horton, R-Haughton.

Lawmakers have until Thursday, June 8 to put together and pass a tax reform plan if they want to do so this session.

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