What is the Industrial Property Tax Exemption Program or ITEP?

ITEP is an incentive that Louisiana uses to attract industrial businesses looking to build or expand in the state. Property taxes may be deferred by companies locating in Louisiana for up to 10 years.  Sales and all other taxes must still be paid.  To receive the incentive, companies must provide jobs and economic investment. Incentives like ITEP give Louisiana a competitive edge over other states. Download our information card here.  Show your support with this quick survey!    
For 82 years, ITEP has attracted hundreds of thousands of jobs and billions of dollars in tax revenue. The investments that these businesses bring to local communities doesn’t end with the company itself. ITEP projects deliver opportunities to Louisiana-based small businesses, like construction companies and restaurants, while providing an important economic input to cities and parishes.  Taxes collected from these investments are used for transportation, education, law enforcement and social services. In fact, public school teachers in parishes with high volumes of ITEP approvals have, on average, higher salaries compared to the rest of the state. Parishes given the highest ITEP incentives flourish!

ITEP Uncertainty Explained

In 2016, Gov. John Bel Edwards altered ITEP, a move that created uncertainty in the program and made it more difficult for businesses to receive the incentive. Because business and industry saw a decline in investment since 2016, in April 2018, Louisiana Economic Development and Gov. Edwards proposed another set of new rules for ITEP that would help ease the process for manufacturers. The new rules, approved in June 2018 now include:
  1. Capping the property tax break at 80 percent for 10 years to enable local government to collect some property tax revenues from the moment new projects begin following construction, in addition to the sales and other taxes they collect from new businesses.
  2. Simplifying ITEP applications to clearly spell out the size of the capital investment, how many jobs it will create and the size of its payroll, among other things.
  3. Providing a detailed economic evaluation on a project's return-on-investment (ROI) by experts at the Louisiana Department of Economic Development and the Board of Commerce and Industry, who then hand local governments only worthy projects for consideration.
  4. Local governments then have 60 days to reject a project if they find anything in the proposal from the state unacceptable for their community.

Stability Enables $130 Billion of Projects Planned to Move Forward

 

As of August 1, 2018, a tally of projects now moving forward include the following sample.  There are more, smaller projects being planned as well.

Your Voice is Needed!

Continued investment is critical to the growth and stability of Louisiana's economy. Help us protect the jobs we have and bring new jobs here.  Get informed and share your voice! Contact local decision makers on your area's School Board, City/Parish Council, Sheriff and Mayor to let them know that you support granting ITEP incentives.
Share your voice!
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Q: How much does industry pay in property taxes now?

A: Two of every three property tax dollars collected in the Capitol Region come from industry and in neighboring parishes it’s even higher. In addition, business and industry pay 50% of all sales taxes collected in the state.

 

Q: What benefits does the Baton Rouge area receive from ITEP?

A: ITEP is crucial to the economic development of Baton Rouge. When businesses move to the area, they employ our citizens, contract with other Louisiana-based businesses, buy products from local shops and eat at our restaurants. Workers in ITEP-heavy parishes have incomes about 18 percent higher than the rest of the state. The economic input provided from this incentive pays for itself in dividends.

Q: Is it true that manufacturing jobs have actually declined over the last 20 years even though we have this incentive?

A: Manufacturing jobs everywhere have declined due to changes in technology and work processes. Many jobs that manufacturing company direct employees used to do are now done by contracted workers who also work in full-time jobs side-by-side plant workers.  In fact, about half of the jobs at industrial plants are full-time contract jobs classified as construction jobs. In the Baton Rouge region there has been a 52% increase in contract industrial craft workers since the year 2000 and it's mainly due to new capital investment (Source: Bureau of Labor Statistics and GBRIA Annual Headcount Collections).

Q: What happens if ITEP becomes too difficult for businesses to qualify?

A: If ITEP becomes too difficult for businesses to obtain, project investments will drop more, which will result in more loss of direct full-time, high-paying jobs in the area. We will also lose sales and other taxes that come to our local economy, which will reduce funds needed for our schools, police force and social services. We must maintain ITEP and continue to bring investments into our community.

Q: Does industrial property ever come on the tax rolls?

A: Yes, immediately, 20% of the project value is paid and only 80% is exempt. Once the contract for ITEP is concluded, the rest of the 80% industrial property will be paid onto the local tax rolls. Many times, companies that received ITEP become some of the biggest taxpayers in a parish. For example, even though ExxonMobil has been a beneficiary of ITEP for many years, they are currently the largest property taxpayer in all of East Baton Rouge Parish, paying over $13 million per year, a sum that pays for half of all the public school teachers.

Q: Would these projects come to the capital region with no exemption program?

A: Companies are under no obligation to bring new projects or expansions to Louisiana. Inside of companies, every large capital investment project is competitive about what states and what facilities will receive an investment. ITEP is used as a financial incentive to make our state more attractive to these businesses looking to invest. In fact, since ITEP has changed over the last two years and become more difficult for companies to obtain, announced capital investment and job creation in manufacturing has slowed dramatically.

Q: Are tax incentives needed to attract new business to the capital region?

A: Businesses consider incentives like ITEP when choosing which state, or parish, to invest in. Tax incentives provide monetary enticements that allow companies to lessen the financial burden associated with building a new business or expansion project. It’s simply a matter a math. If there were no exemption program, it would make it more difficult for businesses to choose Louisiana, as other states do offer these types of incentive and a more predictable tax structure.

Q: Why are incentives given to projects before completion? And what about AFTER project completion?

A: Governments use programs like ITEP to incentivize the behavior they want to encourage: like industrial investment in our state. ITEP creates certainty for companies looking to invest and helps businesses estimate projected costs when determining where to locate potential projects. Companies need the assurance of these types of programs BEFORE ground-breaking to ensure they are making the best investments possible for their bottom line. Another example of this is the Homestead Exemption, which provides an incentive to encourage individuals in Louisiana to purchase homes.  Often times companies do not actually receive the actual incentive until during or after construction as a matter of convenience, because all the costs aren't known until after construction is completed, but they DO count on it to be there when they do the paperwork and they DO consider its availability BEFORE construction begins.

Q: Could entities use money from exemptions to give employees pay raises?

A: Yes, companies can use their savings from ITEP and other tax exemptions to invest right back into their company or the community. For workers in Louisiana, that could mean bigger paychecks and more benefits. For local communities, this could mean increased donations to schools, including technical colleges, or donations to local nonprofits and charities.