Incentives Watch: With ROI in Doubt, Enterprise Zone Program Faces Budgetary Chopping Block

Most states offer some type of tax credit for businesses investing or creating jobs in economically depressed areas designated as enterprise zone. These incentives are meant to stimulate the local economy in these zones. But, increasingly, the issue of whether this type of tax credit program is achieving its intended goal is up for debate.

Stephen Moret, Louisiana’s Department of Economic Development Secretary, recently commented that Louisiana’s enterprise zone program is ineffective at encouraging investment in enterprise zones, which are disadvantaged areas, according to a recent article in The Times-Picayune.

According to an April report from the Louisiana Legislative Auditor, “75 percent of jobs, 68 percent of new businesses, and 60 percent of capital investment were made outside of EZs.” This happened as a result of a law change, which allows businesses located outside of an enterprise zone to qualify for the credit program, so major retailers can qualify for the incentives, the article reports.

Because the tax credit program is not furthering its intended purpose, Louisiana plans on amending the program, notes The Times-Picayune article.

In addition to Louisiana, Illinois is also amending its enterprise zone program for high impact service facilities. Specifically, regulations were adopted that shorten the renewal periods for the high impact service facility machinery and equipment sales tax exemption, notes a Bloomberg BNA Weekly State Tax Reportarticle.

Enterprise zone tax incentives are available in Alabama, Arkansas, California, Colorado, Connecticut, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Mississippi, Missouri, New Jersey, New Mexico, New York, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, Texas, Utah, Virginia, and Wisconsin.

For more information about the various enterprise zone tax credits and incentives available in each state, check out Bloomberg BNA’s State Tax Portfolios.

In other developments . . .

The New Mexico Taxation and Revenue Department outlined the requirements for an eligible film production company to qualify for the film production credit for contractor expenses, according to a Bloomberg BNA Weekly State Tax Reportarticle.

By: Kathleen Caggiano

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