First, the good news: A new study shows that Louisiana is among the states with the lowest non-zero statewide sales taxes.
Now the bad news: At 4.89 percent, Louisiana has the highest average local sales tax rate in the nation.
The Tax Foundation, a Washington, D.C.-based research organization, looked at tax rates with the goal of getting a handle on the factor that local sales taxes play in the total on consumers’ cash register receipts.
“Sales taxes are one of the most easily understood taxes because every time a consumer makes a purchase, they can see the rate on the receipt” Scott Drenkard, an economist for the Tax Foundation, said in a prepared statement.
Louisiana is among nearly 40 states that allow local municipalities to tack on a sales tax rate. The combination of local and state sales taxes can add up.
The foundation said sales taxes are transparent while income tax rates and brackets are confusing and complex.
Tim Barfield, secretary of the state Department of Revenue, said the state has a low tax burden but a complex tax structure.
“This report reflects that reality. This report also states what we have always known – sales tax provides taxpayers with one of the most transparent and easy to understand ways to collect taxes,” he said.
Gov. Bobby Jindal made a failed bid earlier this year to eliminate the state’s income taxes in favor of higher state sales taxes. He abandoned his proposal on the first day of the legislative session after struggling to drum up adequate support.
Drenkard noted that sales taxes need to be taken in context.
“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,” he said.
The report pegged Tennessee, Arkansas, Louisiana, Washington and Oklahoma as having the highest average combined sales tax rates.
At 4.89 percent, Louisiana also has the highest average local sales tax rate. Louisiana’s neighbor, Mississippi, has the lowest non-zero average local sales tax rate at .004 percent.
In Louisiana, the town with the highest local sales tax rate is Lake Providence, which charges 7 percent.
The Tax Foundation found that the highest total sales tax rate in the nation is in Tuba City, Ariz. Tuba City, which is in the Navajo Reservation, has a total sales tax rate of 12.725 percent because of state, county and tribal taxes.