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Louisiana: Six Reasons for Tax Reform

  • Mar 17, 2013 | Gail Cole

 Tax Reform May Be Looming in Louisiana.

Governor Bobby Jindal (R) of Louisiana presented details for his administration's tax reform proposal to a joint meeting of the House Ways & Means Committee. The plan was first introduced back in January, though details were not available at that time. It's a revenue neutral plan-- revenue lost by eliminating the income tax would be gained by elsewhere.

6 Benefits

The governor stressed six benefits to his plan:

  1. No income tax means more control: "Taxing what people spend instead of what they earn gives taxpayers more control over their own money;"
  2. With no income tax, Louisiana is the best place to start a business:
  3. Everyone pays a fair share;
  4. It removes power from special interest groups;
  5. It keeps sales tax exemptions for food, prescription drugs, and utilities; and
  6. A broad state sales tax base means more revenue stability.

Revenue Neutrality

  • Revenue neutrality would be achieved by:
  • Increasing the state sales tax to 5.88% from 4%;
  • Expanding the sales tax to cover many services;
  • Eliminating over 200 exemptions;
  • Eliminating approximately $2.7 billion in personal and corporate income and franchise tax;
  • Implementing targeted tax offsets, such as raising the tax on cigarettes and tobacco products; and
  • Maintaining "vital tax offsets and business competitiveness incentives."

Remote Sales Tax

The plan also creates a uniform sales tax base for all remote sellers (vendors without a brick-and-mortar presence in Louisiana), and establishes a "Louisiana Sales Tax Commission to act as collector, auditor, interpreter, and rule-maker around state and local sales tax." It's goal would be to "reduce the burden of sales tax administration on business." Currently, Louisiana does not have a "unified local and state sales tax collection process… ."

It's a bold plan, and one that is sure to see opposition. Accorging to C.B. Forgotston, a political commentator who has often criticized the governor, "the plan 'will not even get out of the House of Representatives' because of the taxes it would raise… ."

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.