Gov. Bobby Jindal went before the legislature Thursday to unveil his tax proposal. He wants to eliminate the income tax and says the state can make up the gap with a higher and more expansive sales tax.
The proposal would make Louisiana the state with the highest sales tax in the nation. Combined with local sales taxes, Louisianians would pay an average of 10.75 percent in sales tax. And the state would start taxing things that haven’t been taxed before – like landscaping, haircuts, and cable and Internet services.
That revenue would replace some of the revenue from the taxes the governor hopes to get rid off – the personal and corporate income tax, and the corporate franchise tax. The tobacco tax would increase to $1.41 and some other tax breaks would be eliminated to make up the rest.
Before a joint committee meeting of the House Ways & Means and the Senate Revenue and Fiscal Affairs committee, Jindal said he hopes to see the state’s business climate go “from good to great” with the changes.
And he said the intention is to keep the changes revenue neutral.
"This isn’t an exercise to raise taxes. This is not an exercise to put the burden on families or businesses," Jindal said.
The governor's plan includes sales tax rebates for state and federal retirees and low-income individuals and families. And if the proposal doesn’t come out of the legislature revenue neutral, Jindal says he’ll veto it.
But Sen. J.P. Morrell thinks revenue neutrality might be an impossible task.
“I know a lot of the proposed swap is based on estimates – what if the collections end up being significantly lower than what you’ve estimated?," Morrell asked.
Secretary of Revenue Tim Barfield said there has to be a provision added to the legislation trigger an increase or reduction in the sales tax if it didn’t make up the lost income tax revenue. He said the proposal isn’t finished yet, that he doesn’t know how many bills will make up the package.
Debate in the House Ways and Means committee begins March 19.