Tax Incentives OKd for Katrina-Hit Businesses

Congress passed nearly $8 billion in tax breaks for Gulf Coast businesses Friday but rejected federal help for casinos, liquor stores and golf courses.

Almost four months after Hurricane Katrina slammed into the coast, killing more than a thousand people and destroying homes, businesses and jobs, lawmakers responded to President Bush’s appeal for revitalizing the region with a special enterprise zone.

The House and Senate each passed the bill by voice vote.

“It’ll help to get our local government back on its feet, and it’ll help to get our businesses incentivized to come back,” said Rep. William J. Jefferson (D-La.). “It’ll make a huge contribution to restoring and rebuilding our city.”

The tax breaks for business investment are intended to lure companies into the region and keep those already there.

Companies can use a tax credit to defray salaries if they kept employees on the payroll even while closed because of storm damage.

Numerous recreational businesses would be denied the tax breaks.

The list puts limitations on country clubs, casinos, hot tub facilities, liquor stores, massage parlors, golf courses, racetracks and tanning parlors.

A narrowly drawn exception, preventing taxpayer dollars from subsidizing gambling, means that companies could consider their hotels and restaurants apart from attached casinos and take advantage of some of the breaks.

Sen. Trent Lott, a Mississippi Republican who pushed for casinos to share in the breaks like any other legal business, said he had grudgingly swallowed the exception.

“It’s totally bad policy. It’s totally ridiculous. It’s totally hypocritical,” he said. “But this is almost $8 billion. We had to get it done.”

Rep. Frank R. Wolf (R-Va.) drove the effort to deny help to casinos, liquor stores and some other recreational businesses. The lawmaker eventually garnered support from more than 60 of his conservative colleagues in the House.

Other portions of the bill offer special tax-exempt bond authority to rebuild infrastructure, tax breaks to rehabilitate buildings, and expanded tax credits to build more low-income housing in the region.

Some tax cuts would help defray the cost of demolition and cleanup, including a special deduction for cleaning up petroleum products and urban areas with environmental contamination, which are known as brownfields.

Small timber operations and public utilities would get special aid. Students at Gulf Coast colleges and universities would see their education tax credits double.

People hurt by hurricanes Rita and Wilma would get assistance already extended to victims of Katrina, including expanded abilities to recoup casualty losses and withdraw retirement funds without penalty.

The bill also would extend an expiring law that lets military personnel count their combat pay toward the earned income tax credit, a benefit designed to pull low-income workers out of poverty.