ITEP. Many residents of Baton Rouge have never seen this acronym, and many who have do not know what it means. ITEP means Industrial Tax Exemption Program, but even the words behind the acronym do not add much clarity. ITEP is a series of programs intended to stimulate business development by giving businesses tax breaks for locating in a municipality. In 2016, Gov. John Bel Edwards revised the ITEP program over the loud protests of various business leaders. New regulations for the program were published in 2018, and many communities announced they were going to grant larger tax breaks than the reductions available under ITEP. Many state business leaders thought that the controversy had subsided, but two recent actions of the East Baton Rouge Parish School Board have reignited the dispute.
Exxon Mobil applied to the school board for two ITEP grants, actions that had been previously approved by the state. The school board denied the applications, and Exxon then withdrew its requests. Many observers thought that Exxon was attempting to bully the school board, but others have accepted the Exxon action at face value. Supporters of ITEP point to its benefits in spurring industrial development, generating jobs and generally energizing the local economy. Smaller businesses do not often seek ITEP grants, but they benefit when a large corporation uses an ITEP grant to subsidize investment in their business. ITEP grants are often used to finance physical expansions, which, in turn, create construction jobs and permanent jobs when the facility goes on line.
Louisiana’s business climate has often been criticized for high corporate tax rates and complex business regulations. ITEP was supposed to address both problems in favor of the business community, but, when the program was revised, many felt that it still imposed an overly heavy regulatory burden on small businesses.
ITEP’s future is difficult to predict. Businesses may still apply for and receive ITEP subsidies, but the complexity and uncertainty of the ITEP grant process provide significant deterrents. Any business that is contemplating seeking an ITEP may wish to consult an experienced business law attorney for advice on the ITEP grant process.