News -> INDReporter THU, FEB 7 11:00AM by Melinda Deslatte, Associated Press

Jindal seeking to expand sales tax to more items

 

BATON ROUGE, La. (AP) — Paying a lawn service to mow your yard? Storing your boat at a marina? Contracting with someone to repair your roof? Getting cable or satellite TV piped into your house?

Those services and many others could be subject to new Louisiana sales taxes, under ideas being weighed as part of Gov. Bobby Jindal's tax code rewrite.

As he seeks to eliminate Louisiana's personal and business income taxes, Jindal wants to increase the sales tax income flowing to staff coffers, to help offset the loss of billions in revenue.

The Jindal administration is sifting through ideas to charge sales taxes on more products and services. The plans would get rid of some of the current sales tax breaks and roll in services not currently subject to state sales taxes.

The Republican governor's point man on the tax code rewrite, Tim Barfield, calls the plan "broadening the base" of sales tax collections.

The idea, Barfield said, is that the more items that can be swept in to the existing 4 percent state sales tax, the smaller an overall sales tax increase would have to be to counterbalance the nearly $3 billion loss from scrapping income taxes.

"Expanding the base is the largest potential for new revenue," said Rep. Joel Robideaux, R-Lafayette, the chairman of the House's tax-writing committee who will handle much of Jindal's tax code revamp legislation.

The governor has only unveiled the general concepts of what he'll propose in the upcoming legislative session that begins in April, but he's not released details. Spokesman Sean Lansing said Jindal hasn't decided what services he'd like to include in widening the sales tax base or what breaks he wants to eliminate.

Louisiana exempts more than 150 items from state sales tax. The biggest breaks — $1 billion in exemptions on food for home consumption, residential utilities, prescription drugs and fuel — won't be touched under the governor's tax package, Barfield said.

But the state has hundreds of millions of dollars in other, smaller tax breaks that could be proposed for elimination.

Over the years, lawmakers have exempted from state sales tax the educational materials bought for school classrooms, the Bibles and songbooks bought by churches, specialty beads sold to Mardi Gras krewes, telecommunication services, storm shutters, museum admissions, tickets to the New Orleans Jazz and Heritage Festival, poultry farm equipment, bait and feed used to harvest crawfish and breastfeeding equipment.

As for sweeping in new services, some items aren't being considered. Barfield said Jindal won't propose taxing professional services, like doctors' visits or accounting work.

He said the administration has looked at Texas as a model to determine what types of products and services could be taxed, noting that the neighboring state is Louisiana's top competitor for many types of economic development projects.

"In Texas, consumers pay sales taxes on a variety of cable and satellite TV services, credit reporting services, data processing services, information services, custodial and janitorial services and even security services. For the most part, none of those things are taxed in Louisiana," said the Council for A Better Louisiana, which is tracking the governor's tax code rewrite.

Barfield said the administration is looking at the dollars that could be generated, the potential impact on the poor and the effect on businesses, trying to drum up new income without damaging an industry or harming low-income residents.

"We're playing a big balancing act," he said.


Walter Pierce
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Comments (3)add
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written by Michael A. Moss , February 07, 2013 - 09:53 am
He wants to expand the sales tax so he can keep the deductions in place for the politically connected! Also how can this state put up with a fast talking little man who refuses to be interviewed?
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written by Greg Foreman , February 10, 2013 - 10:47 am
“Of the existing 468 tax exemptions in Louisiana, just 25 exemptions represented nearly 80 percent of the $6.8 billion total in FY11”. (Primer on State Tax Structure in Louisiana, PG 11, Louisiana Economic Development). That should narrow “Bobby-ty's” work down.

It isn't necessary for Jindal, the Jindalnista's, or the Dept of Revenue to study each and every tax exemption allowed. It is necessary to study and review those exemptions "costing" the state the bulk of lost revenue. Ok Bobby, send me the check your department of revenue plans on writing to Ernst & Young...I just did their job.
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written by Greg Foreman , February 12, 2013 - 01:31 pm

“The biggest breaks — $1 billion in exemptions on food for home consumption, residential utilities, prescription drugs and fuel — won't be touched under the governor's tax package, Barfield said”. “But the state has hundreds of millions of dollars in other, smaller tax breaks that could be proposed for elimination.”

If as indicated the above mentioned sales tax exemptions(STE'S) will not be touched, and, assuming, 100% of the remaining STE'S were repealed(which one can rest assure 100% want be repealed) the resulting revenue of $966 million produced will fall short of replacing revenue generated by income tax sources by over $1.70 billion.The Louisiana Dept of Revenue Report for 2011 entitled PRIMER ON STATE TAX STRUCTURE IN LOUISIANA , appendix D, reports total STE's for 2011 totaled 2.50 billion dollars. The STE's exempted from repeal by Barfield total $1.550 billion (food for home consumption($334 million), residential utilities($146 million), prescription drugs($239 million), fuel($371 million). Plus, I've taken the “liberty” to include in this $1.550 billion STE exemptions on state and local governmental purchases($203 million)-governmental bodies paying sales taxes is revenue redundancy, and on nonresidential purchases of electricity, business useage, ($257 million), non-residential purchasers of electricity(businesses) certainly want be required to pay sales taxes under a Jindal administration. The revenue “generated” by repeal of the remaining STE's would amount to $966 million assuming all 185 remaining STE's were repealed(a highly unlikely scenario).

Total revenue generated by the state's income tax structure for 2011 amounted to $2.651 billion. With only $966 million available from repeal of all outstanding STE's, the state would suffer a revenue deficit of over $1.685 billion. Even if all current STE's in effect, all 191 exemptions, were repealed the resulting revenue of $2.50 billion would still fall short of replacing 2011 state income tax revenue levels by over $150 million dollars.
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