February 25, 2013
The issue here is simple. The Louisiana state government requires in-state businesses to collect sales tax at point of sale, but does not require the same of their online competitors based out of state.
In other words, our state government is directly responsible for putting Louisiana businesses at a 4 percent cost disadvantage to their online competitors, a number that rises to as much as 9 percent once parish sales taxes are factored in.
This distortion has hurt Louisiana businesses. Indeed, a 2013 survey of independent businesses reported that more than 80 percent of business owners say “showrooming”— when a customer enters a store, browses its selection, solicits advice from employees, then leaves and purchases the item online — is affecting their business.
Gov. Bobby Jindal’s tax reform proposal suggests that lost revenue from eliminating corporate and personal income tax will be made up by increasing other taxes, such as raising the state’s sales tax to as high as 7 percent, pushing total sales taxes to as high as 12 percent. Such an increase would only make the price difference between Louisiana businesses and online vendors more apparent, driving even more residents to purchase items online. Louisiana businesses would suffer, and public services that rely on sales tax revenue — education, public safety — would take yet another hit.
Gov. Jindal has repeatedly opposed requiring online vendors to also collect sales tax, labeling it a “tax increase.” Yet in a speech to the RNC last month, Gov. Jindal argued: “Government must pursue a level playing field. At present, government is the un-leveler of the playing field.”
Jindal’s continued opposition to e-tax fairness is perpetuating an un-level playing field that is hurting his own state’s economy and depriving the state of properly functioning competitive markets.
Jindal now has an opportunity to match his words with actual policy. Require out-of-state online vendors to play by the same rules as their in-state competitors and end this unnecessary issue once and for all.
Mark Strella, project coordinator
Greater New Orleans’ Independent Business Alliance