Proposal advanced to reduce, eventually repeal portion of state sales tax
The House Ways and Means Committee on Monday advanced a proposal that would reduce and eventually repeal the portion of the state sales tax that the Legislature extended last year after months of partisan wrangling.
The bill, by Rep. Lance Harris, R-Alexandria, would gradually phase out the extra 0.45 of a cent of sales tax by 2023. It would reduce the tax by one-tenth of a penny every year from 2020 to 2022 and repeal the rest in 2023.
Under the proposal, the state would lose a total of $392 million in revenues by 2024.
“We might be extracting too much money out of the taxpayer’s pocket because we’re continually ending up with surpluses’’ Harris said,” and we continually raise taxes and fees over the last years.”
He said that a survey of his constituents indicated support for the measure.
Gov. John Bel Edwards, who is up for re-election this fall, said Friday that he opposed any measures to significantly rollback the extra revenue created by last year’s sales tax deal, which, he said, returned the state to financial stability.
Edwards has strong allies in the Senate, which could stop Harris’ bill if it passes the full House. But the push by Harris, who is the Republican leader in the House, could help his party attack Edwards’ tax policies and set the stage for a bigger fight on the issue next year.
Harris said that the state had raised fees and taxes “quite a bit” since the last year of the Jindal administration in 2015-2016. He referred to the reduction of some tax deductions, credits, and exclusions, as well as a total one-percent increase in the state sales tax and an additional tax on cigarettes.
Louisiana Department of Revenue Secretary Kimberly Robinson, who works for the governor, said last year’s compromise on the sales tax came after seven special sessions dealing with fiscal issues since 2016.
“I understand we have surpluses,” Robinson said, adding that the state economy is improving. But she said that this had resulted more from an increase in income-tax collections rather than from the increase in the sales tax.
Robinson suggested that the state had to increase taxes because of individual tax cuts in 2007-08 under the Jindal administration as well as “a myriad of new exemptions” that were created for various industries. She warned that if the Legislature tinkers with the tax code now, “we’re going to not have the stability that we have for 2025.”
Rep. Robert Johnson, D-Marksville, echoed Robinson’s concerns about the risk of the state running deficits again in the future. He indicated that periodic surpluses have not helped address the state’s needs in the past.
“Our teachers haven’t seen a pay raise in a number of years, and the one that they’re going to get probably leaves a lot of them still way far behind Southern, and incredibly far behind national, averages,” he said.
“I’m not saying the sales tax is the greatest way of generating revenue,” Johnson commented. “But if we don’t generate some type of revenue we don’t pay for the services the citizens enjoy in this state.”
Rep. Dodie Horton, R-Haughton, supported Harris’ bill, arguing that the state keeps asking taxpayers to pour more money to failed policies.
Rep. Joseph Bouie, D-New Orleans, said he embraces “a bill that would reduce taxpayer liability,” but expressed his concerns about repealing the sales tax before its original expiration as that could put the state in deficit risk again in the future.
Last year’s extension of 0.45 of a cent of sales tax was a bipartisan compromise. The law was set to expire in 2025 to give legislators time to come up with more permanent solutions to recurring state budget crises. It took one regular legislative session and three special sessions for legislators to reach the agreement.
Harris’ bill is one of several efforts by Republican lawmakers to revise or repeal the extension. Last month, a Senate committee rejected a GOP proposal to reallocate part of the money from the sales tax extension to state roads and bridges.