After getting two extensions on their report deadline, the Tax Structure Task Force was asked to update legislative fiscal committees on their progress Thursday.
Revenue Secretary Kimberly Robinson, co-chair of the Task Force, said while they've finalized some
recommendations, they're still grappling with inventory tax.
“If we eliminate it, we’re having an impact on local governments,” Robinson explained. “If we simply eliminate the tax credit with no change to the tax, we’re having an impact on business. And if we don’t eliminate the credit or make any changes, we’re hitting the state’s finances to the tune of about a half a billion dollars.”
Much of the struggle involves balancing state and local revenue needs, while not overburdening and single segment of the taxpaying public.
“Simply replacing the inventory tax with sales tax is not something that works,” Robinson told the House Ways and Means and Senate Revenue and Fiscal Affairs committees, reminding them that sales tax increases become a greater burden on those who earn less money.
In addition, she explained, different sectors of local government rely on sales tax, while others depend primarily on property tax, which includes the inventory tax.
“School boards are generally dependent upon the property tax collections. Police juries? More sales tax,” Robinson said, adding, “It’s not just as simple as we repeal the inventory tax; they can tax more services on the sales tax side; and it should be a wash.”
She said in addition to the structural issues of balance, they're mindful of the Tax Foundation recommendation that Louisiana repeal both the inventory tax and the inventory tax credit, and that has Task Force members divided on what to do.
“There are those that would like to repeal the inventory tax credit. There are those that want to limit the inventory tax credit or phase it out over a number of years while we figure out how to deal with the inventory tax itself.”
No matter what the final decision is on this thorny problem, Robinson promises, “No more extensions. We are determined our final report will be ready by November 1st.”