As we wait for lawmakers to decide about cutting public school funding, higher education and health care, and about raising the sales tax while limiting personal income tax exemptions, perhaps it’s time to acknowledge the elephant in the room.
“The net corporate collections? Minus $210-million,” Legislative Fiscal Analyst Greg Albrecht says of the state’s current balance sheet.
He has also stated it looks like the state will continue to pay out more to business than it collects from them.
“The forecast is now – for the first time ever – giving me a net negative finish for base corporate collections for the year.”
How does this happen? In addition to the business inventory tax rebate, there are a number of ways corporations get state tax refunds. One of those is known as “vendor compensation.”
“When you remit your sales tax, there’s a line item that allows you a percentage of that sales tax back to you,” Bogalusa representative Malinda White explained on the House floor. She has a bill, HB 43, to cap—not do away with—what amounts to a discount for businesses remitting sales tax collections on time.
“When it was created years ago, we did everything with pen and paper and it was very cumbersome. You had to hire a lot of bookkeepers,” White said of the vendor compensation law. “In today’s world of technologies and submitting on-line within minutes, there’s no longer a need for the state to pay that amount of money out of our sales taxes.”
Vendors currently get a rebate of just under one-percent of the sales tax they’ve collected, as long as they remit the sales tax on time. But the business community is objecting to the cap, which limits the rebate to $50 per month.
Tim Stine, chief financial officer of Stine Lumber Company, testified vendor compensation is still needed --for training personnel.
“We’ve got to teach everybody in every location how to understand what a sales tax exemption is, so they can go in, hit the right button, so we charge the right and proper sales tax,” Stine, a former state representative, told the Senate Finance committee.
House Bill 43, which is estimated to save the state $8-million a year, is set to be heard by the full Senate this evening. Another bill, which would require retailers to submit their sales tax collections two weeks earlier than they currently do, is also on the Senate digest for debate this evening.