La. consumers foot highest sales tax bill in America

(The Daily Advertiser) – Louisiana consumers are paying the highest sales tax rate in America, according to the latest data released by the Tax Foundation this week, almost a half-cent more than the next highest state.

That’s because the Legislature added an extra penny to its 4-cent state sales tax rate last year to mitigate budget cuts. Combine the 5-cent state sales tax with local tolls and Louisiana has an average rate of 9.98 percent. Tennessee is next at 9.46 percent.

It’s a distinction bemoaned even by those who advocated for the tax like Gov. John Bel Edwards and state Rep. Katrina Jackson, D-Monroe, who carried the bill for the governor.

“Oh, Lord,” Jackson said when told of the ranking.

Jackson and Edwards, both Democrats, took some criticism from constituents who argued that sales taxes are the most regressive form of tax and disproportionately affect the poor.

Both agree, but believed the consequences of deeper cuts to health care and other state services without the additional penny would have impacted the state’s most at-risk even more and at the time they had no chance of passing income tax adjustments Democrats would have preferred. Besides, income tax rate increases wouldn’t have come soon enough.

“Adding the additional penny of sales tax goes against everything the governor believes, but he and the Legislature had limited options to address the historic deficits left over from the previous administration when he took office last year,” Edwards spokesman Richard Carbo told USA Today Network this week.

Jackson’s bill did sunset the tax, meaning it will expire in 2018 if not extended.

“When we passed the bill it was a desperate measure to save higher education and health care, but every member knew it wasn’t meant to be permanent,” Jackson said.

“It’s the governor’s hope that we can lower the sales tax and completely reform the tax code to make it fair and predictable for Louisiana’s families and businesses,” Carbo said. “With the recommendations of the bipartisan task force in place, that work can take place during the regular Legislative Session in April.”

The governor’s spokesman is referring to the Tax Force on Structural Changes in Budget and Tax Policy, which issued its final report on Jan. 27.

But structural change, especially when it comes to income tax tweaks, faces an especially resistant House GOP delegation and voters, who rejected an income tax constitutional amendment last fall.

“It’s clear we need true reform,” Jackson said.

But she admitted, “It will be like pulling teeth.”

House GOP Chairman Lance Harris, R-Alexandria, said a “working group” within the Republican delegation has been “analyzing the recommendations of the (task force) line by line” and will come up with its own plan to present to the full delegation before the April session.

“The sentiment I get from members is the sales tax was temporary,” Harris said.

The House GOP chairman said he doesn’t sense any appetite for raising taxes, but he does believe there is a chance members might agree to add some goods and services now exempt from sales tax to the original 4 cents. “I’m seeing discussion about reforming the 4 pennies; expanding the base more like Texas,” Harris said.

Jackson believes it’s just as likely members will vote to extend the current temporary tax as they will pass new reforms.

“A large percentage will choose to kick the can down the road,” she said, “because that’s the easy path to take.”

Greg Hilburn covers state politics for the USA TODAY Network of Louisiana. Follow him on Twitter @GregHilburn1

Highest sales taxes

1. Louisiana (9.98 percent)

2. Tennessee (9.46 percent)

3. Arkansas (9.30 percent)

4. Alabama (9.01 percent)

5. Washington (8.92 percent).

Lowest sales taxes

1. Alaska (1.76 percent)

2. Hawaii (4.35 percent)

3 Wyoming (5.40 percent)

4. Wisconsin (5.42 percent)

5. and Maine (5.5 percent).

Source: Tax Foundation

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