The governor’s office is expected to reveal a proposal to end the state income tax and increase the sales tax late this month or in early March.
If the state’s portion of the sales tax doubles -- from the current four percent to eight percent - locally based merchants would feel the pinch in more than one way. Senator LaFleur said doubling of the sales tax would be necessary for the state to recoup the loss of income taxes and he said merchants have told him they fear the state sales tax could approach 15 percent.
A significant increase in sales tax could cause people who live near the state line, such as in Lake Charles or Vidalia, to cross those borders to save five or seven percent. That could be a significant -- and more noticeable -- amount when purchasing large appliances or vehicles.
Another concern the senator has heard about are taxes applied to professional services provided by doctors, dentists, veterinarians, banks or other service providers.
Also, merchants and lawmakers are concerned that people might be drawn away from local merchants and toward the Internet, “where merchants don’t have a storefront” where taxes can be assessed, the senator said.
Senator LaFleur said he shares the frustration people have with federal income taxes, with the complex forms and “what happens to the money when it gets to Washington.”
But Louisiana’s income taxes are far less complex to calculate, and at 2, 4 and six percent, depending on income levels, are relatively low. “Louisiana would be better served if it continued to have low income taxes,” and simple state tax forms.
The senator referred to a recent CNBC ranking of states that puts Louisiana 12th lowest among state income tax rates. The same ranking has the state with the second highest in the nation in sales and excise taxes in the nation.
The senator also said the state shouldn’t “put all of its eggs in one basket,” by relying heavily only on one type of tax.
An increase in sales taxes would also affect retirees who now pay no income taxes, the senator said.
“But the biggest problem” is that as the state tries to reduce expenditures by cutting state funding to support local police and fire departments, schools and road projects, local governments will have a more difficult time raising funds to pay those costs. That’s because the state can increase sales tax rates without the public voting those issues up or down. But local sales tax proposals must be approved by voters who would be reluctant to do so if state sales taxes are doubled.
Although LaFleur said there are recurring issues, such as assessing student and teacher performance to make funding or policy decisions, during odd-numbered years such as this, the session lasts two months and the focus is on fiscal issues. Legislative sessions during even-numbered years are four months long and are open to all issues.
But there is one other issue Senator LaFleur will vigorously fight for this coming session, which begins April 8: an amendment to the Louisiana Constitution allowing judges to opt out of retirement at 70 years of age.
“It’s unfair,” the senator said. As life expectancy has increased over the years, judges 70 and up “are at the top of their game,” in “maturity and wisdom.” He added active professionals “at 70 years old aren’t the same as they were 20 years ago.”