In The News › BGR: Subsidy program needs upgrade

Mar 19, 2007

Source: New Orleans CityBusiness

BGR: Subsidy program needs upgrade

BGR: Subsidy program needs upgrade

The Industrial Development Board of New Orleans’ method of awarding a subsidy known as “payments in lieu of taxes” is inadequate, according to the nonprofit Bureau of Governmental Research.

The subsidy reduces property taxes for large private enterprises.

BGR said the board must better evaluate subsidy requests. The city lacks institutional framework for the proper use of the subsidies, BGR said.

“The end result is an ad hoc developer-driven process that allows large corporations to negotiate their effective tax rates down to a level far below that of a small business in the city,” according to BGR.

The subsidies “can confer benefits on certain businesses at the expense of others, giving the benefit of the subsidy an unfair advantage,” according to the report.

BGR says the board should not grant a subsidy simply because a project will result in a net gain of tax revenue or jobs.

The subsidy should be considered only if it is strategic, necessary and effective, BGR says.

Mar 19, 2007

Source: New Orleans CityBusiness

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