Panel backs tax break

• By MICHELLE MILLHOLLON
• Advocate Capitol News Bureau
• Published: May 15, 2008 - Page: 1A - UPDATED: 12:05 a.m.

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With Gov. Bobby Jindal’s backing, a House committee advanced legislation Wednesday that would reduce state taxes by $300 million a year.

The House Committee on Ways and Means stripped an amendment from Senate Bill 87 that would gradually eliminate the state personal income tax.

Several lawmakers said they wanted to at least let the full House debate that proposal.

However, state Sen. Buddy Shaw said Jindal agreed to sign a $300 million tax break — not a bill that gradually gets rid of individual income taxes, which generate nearly $4 billion per year.

“Right now, we can have a red letter day and we can make a whole lot of people appreciative,” said Shaw, R-Shreveport and SB87 sponsor.

Shaw said the bill will particularly give tax relief to the middle class.

The maximum tax cut would be $500 for single tax filers and $1,000 for married tax filers.

SB87 would restore the income taxes that the so-called Stelly plan increased.

Stelly, named for Vic Stelly, the former Lake Charles legislator who drew up the measure, swapped higher state income taxes for lower state sales taxes.

For example, in East Baton Rouge Parish, the swap removed taxes on utilities for residential customers and reduced taxes on groceries.

In a telephone interview, Stelly said he is “very happy” that lawmakers did not try to put the state sales tax back on groceries.

He said the plan always was to revisit the income tax increases if state revenue allowed it.

SB87 also would not change the income tax that the Stelly plan lowered. Under Stelly, the first $12,500 of income is taxed at 2 percent for singles instead of the first $10,000.