Tax plan could hit tourism

New Orleans tourism officials said they are concerned Gov. Bobby Jindal’s proposal to eliminate the state’s income and corporate taxes and shift the burden to sales taxes could hurt the city’s hospitality industry.

Stephen Perry, president and CEO of the New Orleans Convention & Visitors Bureau, said in a statement the New Orleans tourism industry is “very supportive” of Jindal and tax reform.

But he said an across-the-board sales tax increase, without business exemptions, could hurt the city’s $5 billion leisure and hospitality industry by driving up the price of hotel rooms and meals. Tourism is New Orleans’ largest industry and employer.

There’s already a tax of more than 14 percent on hotel rooms in the Crescent City.

“If a large increase to that is made, we would have the highest-priced hotel rooms in the country … something that could be very detrimental to our corporate and association meetings business,” Perry said in a statement to The Advocate.

Last week, Jindal floated a proposal in advance of the April 8 legislative session that would wipe out the state’s personal income and corporate taxes. While the exact fine details have not been discussed, one of the ways of making up for the nearly $2.9 billion in lost revenue could be to raise state sales taxes, possibly from the current 4 percent to 7 percent.

This higher state sales tax would mean an effective rate of 12.75 percent for a meal in New Orleans’ world-renowned restaurants, Perry said in his statement.

Over the next two weeks, Perry said the CVB will work with the Louisiana Restaurant Association and the Greater New Orleans Hotel and Lodging Association to conduct research and examine the impact of a higher state sales tax.

“The groups look forward to meeting with Jindal’s staff to “explore ways in which tax reform could work without negatively affecting the largest core industry in New Orleans,” he said in the statement.

Paul Arrigo, president and CEO of Visit Baton Rouge, said he expects the issue of higher sales taxes will come up at the upcoming state travel summit, which will be held next week in Lake Charles. Arrigo said he’s waiting to see what direction the industry takes before coming out in favor of or against the sales tax shift.

Stan Harris, president and CEO of the Louisiana Restaurant Association, also said in a statement he wasn’t ready to discuss specific stances on the tax plan.

“We are working with our hospitality and tourism partners to review the proposal from the governor and its impact to our industry and its promotion activities,” Harris said in an email statement.