WASHINGTON — Louisiana has one of the highest combined sales tax rates in the nation largely because the state has the largest average local sales taxes.
A Tuesday report from the nonpartisan Tax Foundation in Washington, D.C., stated that Louisiana has the nation’s highest average local sales tax rate at 4.86 percent.
Baton Rouge has a 5 percent local sales tax that goes toward the parish and public schools.
Louisiana ranks third nationally in combined sales taxes with an average of 8.86 percent — 9 percent in Baton Rouge — once the 4 percent state sales tax is added. Louisiana trails only Tennessee and Arizona in combined sales taxes, according to the report.
However, the 4 percent state tax ranks only 39th nationally.
Louisiana has the highest minimum local sales tax nationally at 4 percent that rises to a maximum of 7 percent in parts of the state, the report states.
“Retail sales taxes are one of the more transparent ways to collect tax revenue, as statewide sales tax rates are generally well-understood by taxpayers,” Tax Foundation economist Scott Drenkard said. “The local sales taxes collected in thousands of jurisdictions in 37 states, however, often are not. These rates can be substantial, so a state with a moderate statewide sales tax rate can end up with a very high combined state and local rate.”
Delaware, Montana, New Hampshire and Oregon are the only states that do not levy any sales taxes.
“The state of Delaware actually uses its state border welcome sign to remind motorists that Delaware is the ‘Home of Tax-Free Shopping,’ ” the report states, while residents of some cities with higher sales taxes more frequently turn to online shopping to avoid local taxes.
“Of course, sales taxes are just one part of an overall tax structure and should be considered in context,” the report adds. “For example, Washington State has high sales taxes but no income tax; Oregon has no sales tax but high income taxes. While many factors influence business location and investment decisions, sales taxes are something within policymakers’ control that can have immediate impacts.”