A Baton Rouge-based public policy group said Friday that the state can replace nearly $3 billion in tax revenue by eliminating sales tax exemptions and broadening the base.
The Council for A Better Louisiana tackled the issue of how Gov. Bobby Jindal might swap the state’s personal income and corporate taxes for a sales tax hike.
The governor’s proposal, which lacks key details, will be debated in the legislative session that starts April 8.
The organization said replacing the revenue solely with a state sales tax increase would require a hike of roughly 4.5 cents on the dollar. “Needless to say, that would no doubt be seen as far too high of a rate, a detriment to business and too great of a burden on many individuals,” CABL said.
The governor wants to keep intact sales tax exemptions on household food, prescriptions and gasoline.
Barry Erwin, president of CABL, said Jindal could rack up revenue by trying to erase sales tax exemptions on “purchases by offtrack wagering facilities and racetracks, various types of installation charges, room rentals at camps and retreats, purchase of airplanes and equipment by Louisiana-based airlines, sales through coin-operated vending machines, sales of cellular phones and electronic accessories, food and admission to various types of cultural events, admissions to museums, and, of course, the famous Mardi Gras beads.”
He said there are a number of small exemptions that could add up to more than $800 million in revenue.
CABL said the Jindal administration also could broaden the sales tax base to tax services such as lawn service and home repairs.
The organization noted that the question is being raised of “whether taxpayers and economies are better served with a greater reliance on taxes on income or taxes on consumption.”
Erwin said that is the zillion dollar question.
“We don’t know enough about the plan at this time. And when we do we need to have really solid data and good projections that will tell us realistically what to expect,” Erwin said.
Meanwhile, state Rep. James Armes, D-Leesville, expressed concerns that the governor’s plan will not be fair.
“The administration wants a sales tax increase which may sound good to some, but I believe it’s an excuse to make the middle class and our poorest citizens pay more,” Armes said in a news release.