People and businesses in Louisiana who are paying higher property insurance premiums since hurricanes Katrina and Rita should get a tax break for those increased costs, the Senate agreed June 4.
The tax break proposal by Sen. Walter Boasso is one of many moving through the Legislature, only some of which will be enacted. Senate and House committees also approved a handful of other tax cuts, including a “sales tax holiday,” a change in state inheritance law and business tax breaks.
The Senate with a 34-1 vote approved Boasso’s bill, a plan to create refundable tax credits estimated to cost Louisiana $500 million over the next two years. Boasso, D-Arabi, and other supporters said it was a small cost to help people struggling to recover from the hurricanes in the face of large insurance increases.
“What we have now in Louisiana is an insurance crisis like we’ve never seen before, and it’s completely paralyzed Louisiana, both in its recovery and in its future,” Boasso said.
Under the bill, residents and businesses would be able to take a tax credit for their 2007 Louisiana taxes of 78 percent of the increase in their property insurance premiums since 2005. For the 2008 tax year, they would be able to take a tax credit of 48.5 percent of the increase.
Boasso said the state could afford the two-year tax break by dipping into surplus funds from the current and last fiscal years. The senator said that money was generated partially by the hurricane recovery as people replaced damaged goods and businesses paid higher wages because of labor shortages – boosting state tax collections.
But the bill far from certain of passage in the House. The House is considering other ways to spend those unbudgeted dollars that don’t anticipate the insurance tax credit.
The only senator to vote against Boasso’s bill was Sen. Robert Adley, D-Benton, who said the tax credit represented a giveaway that helps insurance companies and wrongly puts the state of Louisiana in the business of paying people’s insurance bills.
“I don’t think that’s good policy. I don’t think that makes sense,” Adley said.
Senate Bill 242 can be found at www.legis.state.la.us
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