Businessmen: Tax plan no good

Published 12:00 am Monday, May 22, 2000

FERRIDAY, La. – &uot;This is not the way to do it.&uot; That’s how businessman Don Ater sums up Gov. Mike Foster’s proposal to create a single business tax to generate the needed revenue to raise teacher salaries through Louisiana.

Ater, like many Concordia Parish businessmen, said he sees the need for a teacher pay raise, but he disagrees with Foster’s proposal, now before the House.

&uot;It would be a tremendous burden,&uot;&160;said Don Ater, owner of Ater Warehouse in Ferriday. &uot;Normal business deductions wouldn’t apply, and it would be levied regardless of whether your business makes a profit or not.

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&uot;I agree with pay raises for teachers, but this is not the way to do it.&uot; The bill would repeal the state’s 3-cent sales tax on food and utilities and corporate franchise and income taxes and replace them with the 1.85 percent tax on businesses with gross receipts of more than $500,000.

The tax would be levied on a base that includes federal adjusted gross income, wages, salaries and benefits paid, depreciation, rents, royalties and leases, interest paid and direct federal taxes. The tax would generate about $755 million, most of which would be used for teacher raises.

The proposal was pending final consideration by the State House of Representatives as of Monday.

In the parish, the bill has been the topic of much talk.

Vic Vegas of Delta Fuel and Delta Parts in Ferriday said his business already pays $2 million in federal and state fuel taxes whether the business makes a profit or not. Another tax, he said, is a burden he and other Louisiana businesses just don’t need.

&uot;This would be a tax on volume, and we’re a high volume, low profit business,&uot;&160;Vegas said.

&uot;There are small businesses struggling everywhere, hanging on by a thread, … and this tax might be the kill shot for a lot of them. I’m dead against this proposal.&uot;

Al Ater, a Concordia Parish farmer and former state legislator, said his farm would not be affected by the proposed law because it is a sole proprietorship and, therefore, would be exempt under the current version of the bill.

But for estate planning reasons, many small businesses are organized as limited liability corporations and other types of corporations, which would not be exempt, he said.

&uot;And this tax would not allow them many deductions they would usually get, such as deductions on rent and salaries,&uot;&160;said Ater, brother of Don Ater.

Al Ater said a similar measure was considered during his time in the Legislature several years ago but was axed.

&uot;It’s not a well-thought-out measure and is not in the best interest of small business … or large business, for that matter,&uot;&160;he said.

Professionals who solely provide services and not products — such as attorneys, doctors, dentists and accountants — would be hit hardest because they are allowed few deductions, Al Ater said.

&uot;My question would be what this tax would be levied on. Would the court costs I&160;have to pay for clients be included?,&uot; said Jack McLemore, a Vidalia attorney.

For his part, McLemore sees &uot;sin&uot;&160;taxes on alcohol, cigarettes and gambling as the most fair tax that could be used to generate funds for teacher raises.

&uot;Why can’t we put a tax on things that are bad for your health and burden society?&uot; he said. &uot;Besides, a person who wants alcohol or cigarettes is going to pay for those things even if it’s $4 or $5 more a bottle or $2 or $3 more for a six-pack.

&uot;If not that, make it a sales tax and let everybody pay their share,&uot;&160;McLemore added.

Others pointed out that only the state of Michigan levies a similar tax. &uot;And they’re in the process of phasing it out,&uot;&160;said Randy Ward of Ferriday Farm Equipment.

&uot;If 49 states haven’t tried it and the 50th one is getting rid of it, what does that tell you?&uot;, Al Ater said.

Most Concordia Parish business people are keeping up with news on the tax in newspapers and through the Louisiana Association of Business and Industry, which is lobbying stringently against the tax.

Meanwhile, said Don Ater, local business people need to write, fax or call local legislators to voice their opinions on Foster’s proposal. &uot;We need to make our voices heard,&uot;&160;he said.