The Louisiana House of Representatives approved legislation Wednesday that would extend sales taxes to digital streaming services, establish a flat corporate income tax and repeal a host of tax breaks tied to special interests.

The legislation is part of Gov. Jeff Landry’s tax overhaul aimed at replacing lower income taxes with an expansion of sales taxes on goods and services.

House Bill 8sponsored by Rep. Ken Brass, D-Vacherie, passed the lower house by a vote of 80-19 and will next head to the Senate for consideration.

The proposal would extend the state sales tax to a wide range of digital goods and services, including video and audio streaming services, smartphone and tablet apps, video games and other downloadable or streamed content.

This would not apply to intangibles such as online stock purchases, patents or copyrights. Telecommunications and internet access would also be excluded from the sales tax, as they already fall under a standalone tax for those services.

The bill would further exempt certain digital products used exclusively for commercial purposes. Users of telemedicine and online banking services, for example, would not be taxed. Brass’ measure would also repeal current sales tax exclusions for custom software and newspapers.

If passed, Brass’s proposal is expected to generate more than $178 million in revenue for the state over the next five years, assuming a voluntary compliance rate of approximately 35 percent and a sales tax of 0. 45% which will expire next year, according to a report. analysis of the Legislative Finance Office.

Revenue from Brass’s bill would be used to help offset other elements of Landry’s tax package. They understand Parliamentary Bill 2sponsored by Rep. Julie Emerson, R-Carencro, who cleared the House in a 79-19 vote Wednesday. It will also be submitted to the Senate for consideration.

Emerson’s bill would replace the current corporate tax structure, which tops out at 7.5 percent, with a single flat rate of 3.5 percent. Before it reaches 3.5%, the rate would be reduced to 5.5% for the fiscal year beginning July 1, 2025, to mitigate the impact of the tax overhaul on state revenue .

To make up for some of the lost revenue, Emerson’s legislation proposes eliminating a series of special interest tax breaks over the next few years. The state is estimated to lose revenue every year until the 2028-2029 fiscal year, at which point all relative tax breaks would disappear and revenue could start flowing in again, according to the bill. tax analysis.

Key elements of Louisiana tax overhaul approved by House

The ax would fall on popular incentives for film production, small business innovation, the rehabilitation of historic structures and recording studios, among others.

This part of the legislation drew bipartisan opposition from some lawmakers, but not enough to kill the bill.

Rep. Mike Bayham Jr., R-Chalmette, spoke admiringly of how the movie tax credit has created jobs in St. Bernard Parish and prompted movie companies to revitalize old department stores abandoned. He pointed out that U.S. House Majority Leader Steve Scalise, Republican of Louisiana, created the tax credit years ago as a state lawmaker.

Bayham said his colleagues assured him they would continue to work on legislation to protect some form of incentive for the film industry. He voted in favor of Emerson’s bill but threatened to oppose it later if he “returned to a position that doesn’t work.”

Rep. Michael Echols, R-Monroe, praised the economic benefits of a tax credit for developers who renovate dilapidated historic properties. He said the governor personally promised to support an alternative program in the future.

Businesses and individuals stand to benefit from lower income tax rates if the governor’s overhaul passes. Emerson and other supporters said it was necessary to stem Louisiana’s continued population loss and attract new businesses to the state.

Rep. Mandie Landry, D-New Orleans, said she doesn’t think people are leaving because of the state’s tax structure. Over the years, the Legislature has passed various tax laws that supporters said would attract businesses to the state, she said.

Others have pointed out that the tax package is unique in that it will simultaneously overhaul many elements of the tax structure.

“For 50 to 70 years we’ve been doing the same thing, and it’s not working,” Echols said. “…It’s time for a change.”