I commend Gov. Bobby Jindal for wanting to repeal the state income tax. That was the theme of my campaign for governor in 2007. Evidently we now agree that the most-prosperous states do not tax income.
We also agree that Louisiana’s century-old severance tax on oil and gas should be repealed as well.
There are better ways to fund state government than collecting an extremely high tax of 12½ percent of value on oil produced in Louisiana.
Unfortunately, repealing income and severance taxes creates a $4 billion hole in the state budget.
To make up the revenue loss, the governor would raise sales taxes up to 16 percent, including local taxes.
I would not put that load on the people of Louisiana, nor risk our retail and tourism industries.
There is a better way. A 4 percent tax on all the oil and gas processed in Louisiana, including the vast amounts imported from offshore wells and foreign countries, would raise $4 billion a year.
A hydrocarbon processing tax would recognize Louisiana’s evolution from producer of oil and gas to processor, which has made the severance tax obsolete.
A processing tax would gain income for the state from an offshore oil industry that has heavily damaged our coast.
Best of all, since the severance tax is in the state constitution, replacing it with an oil and gas processing tax would require a vote of the people, which I welcome.
Oil companies say they will leave Louisiana if we tax oil and gas processing. But we have the oil and gas and the infrastructure to process it.
Gulf of Mexico production is back to its pre-BP-spill levels and expanding. Our shale formations hold huge reserves of oil and gas.
Louisiana has 50,000 miles of pipelines, numerous refineries and a skilled workforce. We have the Mississippi River to ship product in and out.
Oil companies aren’t leaving, but people are, as shown by our loss of a congressional district. If you saddle Louisiana with a 16 percent sales tax, the outmigration will worsen.
I say repeal income and severance taxes. But higher sales taxes hurt the middle class and working people and threaten retail businesses and tourism.
The governor can meet his goals and balance the budget without creating new problems of inequality. Confronting major oil companies will take courage but the reward is great: a stable tax base; proper support for education, health care and public services and a strengthened economy.
Louisiana should be the most-progressive state in the South, not competing with Mississippi for last place. The right tax policy can help us fulfill our potential.
public service commissioner
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