LAFAYETTE — City-parish government is considering ending a sales tax rebate that helps area businesses cover accounting expenses related to collecting and paying the tax.
A long-standing local law has allowed businesses to keep 2 percent of total collections for city-parish government sales taxes as long as the sales tax payment is on time.
The City-Parish Council is considering ending that practice, a change that could bring more revenue to a local government that has been struggling to meet annual expenses.
“The financial strap we are in, it only makes sense to collect all the taxes,” said City-Parish Councilman Jay Castille, who is sponsoring an ordinance to end the tax rebate.
The ordinance is scheduled to be introduced Tuesday and to come up for a final vote Feb. 5.
Ending the rebate could bring in an additional $1.5 million a year for city-parish government, according to estimates in an overview of the proposal by City-Parish Traffic and Transportation Director Tony Tramel.
That’s about $1.4 million from the 2 percent city of Lafayette sales tax and $100,000 for the 1 percent parish government sales tax collected in the unincorporated areas outside of Lafayette, according to the estimates.
Tramel wrote the 2 percent rebate “appears” to have been implemented years ago “to appease the retail community.”
He also wrote that, based on recent opinions from the city-parish legal department, the rebate might be considered an impermissible donation of public money to private businesses.
State law general prohibits local government from giving money, services or other things of value to private individuals or businesses.
“To me it’s illegal to start off,” Castille said.
Most other government entities in the area have ended similar rebate programs.
The Lafayette Parish School Board ended its sales tax rebate program in 1994, followed by Youngsville in 1999 and Carencro and Scott in 2011.