GOP Leaves Casinos, Massage Parlors and Liquor Stores Out of Katrina Tax Breaks

House Republicans decided Tuesday to stop casinos, massage parlors and liquor stores from cashing in on tax breaks for businesses in Gulf Coast communities ravaged by hurricanes.

Rep. Frank Wolf, R-Va., lead the movement to carve those businesses out of any special tax incentives intended to lure jobs and commerce back to the region.

"Federal tax dollars need to be focused on those who truly need the government's help, like the poor, vulnerable and elderly," Wolf said in a statement on the House floor.

Acting Majority Leader Roy Blunt, R-Mo., told reporters that he believes it's appropriate to deny special tax breaks to those industries. "That's my personal view of that," he said.

Lawmakers got to work on a package of business tax breaks after President Bush, speaking from New Orleans in September, proposed a Gulf Opportunity Zone to rebuild the regional economy. He proposed investment incentives, loans for small businesses and other rewards.

A House bill, scheduled for debate on Wednesday, fulfills the order for a special investment zone. It prohibits country clubs, casinos, hot tub facilities, liquor stores, massage parlors, private or commercial golf courses, racetracks and tanning parlors from using tax incentives special to the Gulf Coast.

Blunt said he wants to see the bill enacted before the end of the year so that businesses, whether returning or new enterprises, know the tax consequences of their decisions. The Senate already passed a bill with $7 billion in such incentives that does not exclude casinos or other businesses from its provisions. It's one portion of a nearly $58 billion tax bill.

Wolf said tax breaks for those recreational industries were particularly inappropriate at a time when Republicans want to trim federal programs in order to curb budget deficits and offset the costs of reconstructing hurricane-damaged communities.

"Giving tax breaks to massage parlors, casinos, liquor stores and golf courses while we cut federal programs for the less fortunate cannot be explained to the American people," he said.

The bill targets assistance to businesses in the region hit by Hurricane Katrina and individuals effected by Hurricanes Rita and Wilma:

— It provides an emergency allocation of low-income housing tax credits and increases tax credits for restoring commercial buildings.

— It permits businesses to claim an additional depreciation deduction worth 50 percent of new property investments made in the designated zone, including computer software, commercial and residential real estate expenditures and equipment.

— Small businesses could expense twice the amount of qualifying investments on $1 million in equipment.

— Individuals hit by Hurricanes Rita and Wilma could take advantage of aid already enacted after Hurricane Katrina that allows people to more easily draw from their retirement accounts and fully deduct their unreimbursed losses.