The task force appointed to study ways to reform Louisiana’s budget process and tax structure is scheduled to make its final report this week. Unfortunately, there is already a clear indication that most of its proposals will be unpopular with one group or another.
The state’s 5 percent sales tax, when combined with local sales taxes, totals almost 11 percent, highest in the nation and a job and business killer. A 1 percent increase in the state sales tax that passed in an earlier special session goes off the books in July of 2018, and the big question is how do you replace the $880.6 million it raises annually.
Jim Richardson, an LSU economist and co-chairman of the task force, said, “The state will collect about $4.3 billion from sales tax revenue in the current fiscal year. We’d like to keep that at about $4 billion.”
Other states started levying sales taxes on untaxed services when their revenues declined, and that is expected to be one of the task force proposals.
The Center on Budget and Policy Priorities said service taxes fall into three categories — services purchased by businesses, those purchased by households and those purchased by both groups. Payroll processing and television advertising are two examples of the first category. Diaper service and cable TV are individual services, and landscaping and pest control are examples in the third group.
Task force members also want to lower tax rates, eliminate some tax breaks and give local governments more authority to raise their own taxes and get less funding from the state.
Rep. Cameron Henry, R-Metairie and chairman of the House Appropriations Committee, told The Advocate back in February that 25 percent of state construction dollars, for example, goes for local projects.
“Want to build a playground? Raise the millages and build the playground. When the playground is built, remove them (the millages). And if you can’t raise the millages, you don’t get a playground,” Henry said.
Lake Charles Mayor Randy Roach, a member of the task force, told the newspaper this week that tax reform is always complex.
“We fully understand different interest groups will have questions,” Roach said. “Business will have questions. Local government will have questions. If there were an easy answer, we would have found it by now.”
The individual state income tax is also on the table. In return for a lower flat income tax, the task force would ask voters to approve a constitutional amendment that would eliminate their ability to deduct federal income taxes on their state income tax forms. Lawmakers tried unsuccessfully to start that ball rolling during two special sessions.
Rep. Julie Stokes, R-Kenner, sponsored both bills. The measure in the first special session cleared the House 91-10, but died in the Senate. It would have established a 4.5 percent flat income tax considered revenue-neutral in the first year. Currently, there are three different tax brackets.
Stokes brought the bill up again at the second special session and the House rejected it this time 46-49, which is 24 votes short of the two-thirds (70) needed. Legislators obviously decided by that time they had done enough tax reform, which could be a problem again next year.
A similar proposal dealing with corporate income taxes is on the Nov. 8 presidential ballot. It would establish a flat corporate income tax rate of 6.5 percent, replacing five different rates topped at 8 percent.
The Tax Foundation recently ranked Louisiana as having the worst business climate in the South and one of the 10 worst in the nation. This amendment, if approved, would move the state near the top of the list of favorable business states.
The last big ticket item on the agenda would be a five-year phase-out of the local inventory tax. Local governments would need another avenue for raising the nearly $500 million the state gives back every year to local businesses that pay the tax. Reducing the local property tax exemption for new business and industry is one avenue for doing that. Unfortunately, local governments don’t want to end the inventory tax and manufacturing companies don’t want to lose any of the property tax exemption.
As you can see, nothing would come easily. However, as bitter a pill as it would be for many taxpayers to swallow, these changes are essential in order to avoid a repeat of the last nine years of budget deficits and severe budget reductions. The current deficit is over $300 million.
The state provides valuable educational and health care services, and current revenues simply aren’t providing the basic money needed. Experts agree Louisiana’s tax system is too complex, it violates too many good government rules and the poor are paying an unfair share.
If the governor goes along with these proposals, the second step rests with the Legislature. We saw at two special sessions there is a conservative group of Republicans in the House that refused to go the extra mile. They said revenues might improve, but they haven’t changed much.
Louisiana state government has come to a serious crossroad. It can keep funneling hundreds of millions of its revenue dollars to local governments. Or it can ensure that local governments have the ability to raise the money they need to take care of their own needs.
As we said at the beginning, tax reform is tough, but it can be done. The current tax system clearly isn’t working.
from American Press: Your Best News And Advertising Source - Home http://ift.tt/2eWiG38
0 التعليقات:
Post a Comment