Disagreements on need for change in tax incentive program

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NEW ORLEANS (AP) — Louisiana’s Legislative Auditor’s Office is suggesting changes to a popular tax break aimed at encouraging businesses to locate or expand in the state. But the state’s economic development department disagrees with the findings.

The Advocate reports that the auditor’s office recommends caps on rebates of sales and use taxes and certain expenses under the Louisiana Quality Jobs incentive program.

The Louisiana Economic Development department defended the current program, which gives companies creating well-paid jobs a cash rebate for up to 6% of the annual gross payroll for those jobs. It also includes rebates state sales and uses taxes on purchases of equipment and supplies.

“LED remains confident the Quality Jobs Program is administered professionally, in accordance with state law and legislative intent; and further, LED welcomes worthy recommendations for improvement,” the department said in a statement on Monday’s audit report. “Two-thirds of Quality Jobs are manufacturing jobs that pay twice as much as the average Louisiana sector and are six times more economically productive than the average.”

LED dismissed the economic model the Legislative Auditor used as flawed. The auditor’s report found less glowing results than those found by a firm LED hired to analyze the program.

Regional Economic Modeling Inc., which is based in Massachusetts and is known as REMI, showed the Quality Jobs program generates $78 million to $105 million a year in state tax revenue. REMI said the program has an employment impact of 36,000 to 49,000 jobs, personal income impact of $1.9 billion to $2.6 billion a year, and annual GDP impact of $4.3 billion to $5.6 billion, The Advocate reported.

REMI assumed in its analysis that all the jobs reported were created solely because of the Quality Jobs programs, Legislative Auditor Daryl Purpera said.

The Legislative Auditor’s Office used a model that accounted for some companies locating in Louisiana and creating jobs regardless of the incentives.

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