Louisiana: Real change is needed
- Jun 3, 2016 | Gail Cole
Unless real change occurs, Louisiana’s fiscal future is bleak. The budget deficit in the upcoming fiscal year is projected to be $600 million. In five years, without a significant revision of the state’s budget and tax policies, the deficit could be in excess of $2.5 billion.
In an attempt to stop the hemorrhaging, legislators enacted a number of tax increases and temporarily suspended many exemptions during an emergency session last spring. Changes effective April 1, 2016 include the following:
- State sales tax rate increase (it’s scheduled to expire on June 30, 2018)
- Internet (remote) sales tax
- Reduction in sales tax holidays
- Temporary taxation of admissions
- Temporary communications tax rate increase
The state even imposed sales tax on Girl Scout cookies. Is nothing sacred?
These emergency measures are a start, but they’re not enough. So the newly created Task Force on Structural Changes in Budget and Tax Policy is working hard to come up with better, more permanent solutions. Its goal? Break the “cycle of massive shortfalls” that has been plaguing the state since 2008.
192 exemptions
When he took office in January, Governor John Bel Edwards (D) spoke of the need “to return to a sensible, balanced approach.” One way to do so is to tackle the state’s 192 sales and use tax exemptions and exclusions. It is unlikely to be easy. As the task force considers taxing services and cutting existing exclusions and exemptions, lobbyists are preparing to fight to preserve the tax policies that benefit their clients.
There is much to decide during the upcoming special session of the Louisiana Legislature, which will run June 6 – 23. But it won’t all be about cutting taking tax breaks. While addressing the budget shortfall, legislators will also be asked to reinstate the state sales tax exemption for admissions to private and public elementary and secondary schools’ athletic and entertainment events, meals at schools, nursing, mental institutions and universities, and food sales by youth organizations — because no one wants Girl Scouts to have to deal with tax.
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