With questions swirling about the accuracy of the numbers behind the governor’s tax package, the Jindal administration late Thursday increased a proposed state sales tax hike.
Gov. Bobby Jindal now wants the state sales tax rate to increase from 4 percent to 6.25 percent, instead of to the 5.88 percent previously discussed.
In Baton Rouge and New Orleans, the combined state and local sales tax rate would climb to more than 11 percent on each dollar spent.
“We have been working with the Public Affairs Research Council, the Legislative Fiscal Office, various industry stakeholders, and legislators to ensure that we are using the best data available to meet our goal of revenue neutrality as well as our goal of ensuring that families at every income level will be better off,” Tim Barfield, executive counsel at the state Department of Revenue, said in a prepared statement.
Barfield has been leading the governor’s push to eliminate the state’s personal income and corporate taxes in favor of a higher state sales tax rate and taxing currently untaxed services such as cable television and hair cuts.
House Democratic leader John Bel Edwards, of Amite, questioned whether the Jindal administration knows what it is doing given the last-minute change to the plan. The session starts in a little more than a week.
“I don’t know how anybody can have confidence in the plan they’re putting together,” Edwards said.
The Rev. Lee T. Wesley, pastor of Community Bible Baptist Church in Baton Rouge, said Thursday night the change would make a bad situation worse.
Wesley was among ministers who last week delivered a letter signed by 250 clergy from across the state. The letter to Jindal stated that the ministers believed the sales tax increase would hurt the poor and middle class.
“Wow, that’s unbelievable,” said Bishop Gregory Cooper Sr., of Morning Star Full Gospel Church in south Baton Rouge and Antioch — A Full Gospel Baptist Church in north Baton Rouge. Cooper was among the clergy who met with Barfield on Tuesday to raise concerns that the proposed increase in sales taxes would require low- and middle-income people to spend a larger percentage of their incomes to buy essentials.
“This was not mentioned” at the clergy’s meeting with Barfield, Cooper said. “If accurate, it appears that this is a slap in the face.”
The proposal will be debated in the legislative session that starts April 8.
Jindal made no mention of the change in his tax proposal during a noontime luncheon with New Orleans-area businessmen Thursday. Instead, the governor characterized the state’s tax code as unstable and unfair.
Jindal has said he wants his plan to be revenue neutral in order to avoid any impact on a state budget that funds hospitals, colleges and other public services. Neutrality would require replacing roughly $3 billion in state revenue by the elimination of income taxes.
A Baton Rouge-based research group raised concerns earlier this month that the governor’s tax plan could be at least $500 million shy of achieving revenue neutrality. Central to PAR’s concerns was the administration’s use of personal income tax numbers from a couple of years ago when the economy was coming out of a recession while using sales tax collections that reflected a more healthy economy.
The state’s largest business lobbying group — the Louisiana Association of Business and Industry — dealt another blow this week when it warned that the tax proposal was unacceptable to the business community. Many of the newly taxed services are expenses borne by businesses.
With session approaching and the bills associated with the plan needing to be filed, the Jindal administration also faced the Legislative Fiscal Office judging whether the numbers added up. The office is staffed with economists who look at the financial impact of proposed legislation.
The office’s director, John Carpenter, said Thursday that he had concerns about the revenue generated by the plan falling into the negative column.
“We’re concerned. I can’t say it enough that we’ve got to be comfortable with the numbers. We’re going to produce our own numbers,” he said.
Carpenter said he still is waiting to see the legislation. He said he does not know enough about Thursday’s change to offer an opinion on whether the plan would work.
Robert Travis Scott, PAR’s president, said he looked at the latest set of numbers but has made no further analysis.
“As they do their analysis and roll all their numbers forward to see what the impact will be they’re recognizing some new numbers. To their credit they’re facing up to some of the costs and offsets that make this really challenging,” Scott said.
Mark Ballard of the Capitol news bureau contributed to this report.
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