Effort to scale back tax breaks draws pushback

Published 9:28 am Tuesday, March 29, 2016

BATON ROUGE — Efforts to reduce tax breaks continued to run into resistance here Monday during hearings before the Senate Revenue and Fiscal Affairs Committee.

Sen. Bret Allain, R-Franklin, and Mike Strain, state commissioner of agriculture, were chief spokesmen for the agriculture industry that receives some two dozen tax breaks. They talked about agriculture being the state’s largest industry, occupying 85 percent of the land area, and being “a price taker, not a price maker.”

The committee is looking at all tax breaks as an effort to eventually reduce some of the $7.7 billion in annual tax breaks of all kinds.

Allain said farmers cannot affect prices by what they do because they don’t set prices, and there is a constant downward pressure on prices. He traced the industry back to the Great Depression.

Farmers in those days had to struggle to feed their own families, he said, much less try to feed others. He said food prices had been 25 to 30 percent of a family’s income, and they rose to between 50 and 60 percent during the depression.

The modern U.S. Department of Agriculture was an outgrowth of those hard times, Allain said. It helped launch programs like farm credits, agriculture cooperatives and research started at land grant universities, he said.

Allain said government nutrition programs were started in the 1950s and 1960s, and the USDA spends $62 billion of its $84 billion annual budget on nutrition.

If well-documented programs weren’t in place, the cost of food would probably double, he said. Agriculture is treated differently because of the cost of food, he said.

“It’s why we don’t tax agriculture products because of the cost it would bear on the people served,” he said.

Strain said state agriculture was a $5.9 billion business nine years ago and it has grown to $12.7 billion today. He said it isn’t taxed anywhere else in the United States.

Its competition is other countries, Strain said, adding that $8.3 billion of its products are exported. Sixty percent of that comes down the Mississippi River, he said.

“Exemptions are about international competition and protecting 273,000 jobs,” he said.

Members of the committee said the general consensus on tax exemptions is that nothing should change. They urged the agriculture spokesmen to come back and make some suggestions because tax breaks have to be reduced.

“What are the most worthy exemptions to keep?” one of them asked. “It’s not a question of taxing enough but giving away too many taxes.”

Sen. Troy Carter, D-New Orleans, said every interest enjoying tax exemptions wants to keep them. The end result is that other needs like infrastructure improvements don’t get done, he said.

“We never fix the problem. Everyone has got to give a little,” he said. “If it stays this way, we will never fix anything.”

(MGNonline)