After yet another delay, the Lafayette City-Parish Council will consider on Tuesday an ordinance that would repeal a 50-year-old law giving retailers in the city and unincorporated parish a slice of the sales tax pie. Since the early 1960s when the city first began levying a sales tax — the parish began levying a sales tax in 1972 — merchants were given a 2 percent rebate in taxes collected as an incentive to turn the taxes over to government in a timely fashion.
The ordinance was originally before the council in February, but it was tabled amid opposition from local tea party representatives and concerns from the Greater Lafayette Chamber of Commerce. It was on the agenda again two weeks ago but was tabled again due to the unexpected death of Councilman Kevin Naquin’s grandfather. (Naquin is a co-sponsor of the ordinance.)
In a December 2012 memorandum to Councilman Jay Castille, the ordinance’s other sponsor, former Director of Traffic & Transportation Tony Tramel, who retired at the end of March, estimates repealing the rebate would generate $1.4 million in additional revenue for the city of Lafayette and $104,000 for the parish.
According to LCG figures compiled by Tramel, the sales tax rebate to vendors for the year February 2011 through January 2012 amounted to more than $1.5 million for both the city and the parish, which operate on separate budgets.
As long ago as 1994 and as recently as 2011, the cities of Carencro, Scott and Youngsville, along with the Lafayette Parish School Board, have repealed rebates offered to merchants for timely collection of sales taxes.
Tramel also questions the legality of the sales tax rebates to merchants:
It appears the 2% rebate provision to vendors was included in the original ordinances to appease the retail community regarding their effort to collect, administer and remit the approved sales tax. ...Recent opinions from our City-Parish attorneys indicate government cannot donate anything of value to others, which raises the question as to why/how LCG can rebate/donate sales tax dollars to local businesses...
Speaking to The Ind a couple of weeks ago Castille says since the ordinance was originally deferred, he’s heard no complaints about its
impact on businesses. “I haven’t gotten any negative feedback from anyone to tell you the truth,” Castille says. “I haven’t any business owner call me and complain about it.”
The District 2 councilman said concerns about a repeal’s impact on local businesses are overblown. “As a business owner, you know going into business you have to collect taxes and pay taxes. It’s the right thing to do, and I just can’t understand why some of these politicians just don’t see that. ... I pulled the numbers up and I’ll tell you what, some businesses only get $300 a year. If that’s going to break that business, that business needs to look at its business plan and revamp it. Come on, man.”