JUNEAU: The Lesser Known Tax Reform Proposals
Governor Jindal’s tax reform proposal for the upcoming legislative session that begins April 8 has taxpayers in the state crunching numbers to see if they are net winners or losers under the proposed plan. The media paid much of their attention on the income tax/sales tax swap portion of the proposal; however, the Governor’s plan also includes administrative reform proposals that could greatly advance how most businesses perceive Louisiana.
One of those administrative proposals is a state and local sales tax commission. Prior to 1991, Louisiana had hundreds of local sales tax collectors. Following approval of a constitutional amendment in 1991, the state government required each parish to have only one sales tax collector. Even with only one collector per parish, we are still out of line with almost every other state which has only one statewide collector.
Government tasks businesses in Louisiana with the obligation of collecting state and local sales tax as agents on behalf of taxing jurisdictions. As the real “collectors” of sales tax revenues in our state, our sales tax system needs to be more tailored and accommodate those businesses on the front lines doing the collection work for government.
For example, the current system subjects businesses collecting sales tax to multiple sales tax account numbers, forms, audits, interpretations, and lawsuits. The Governor’s proposal for a single state and local sales tax commission would substantially address many of these issues by streamlining the process and providing the taxpayer with one collection interface. This streamlining proposal may also place Louisiana in line with other states for the collection of internet and other online transactions, once the federal government removes barriers to collection.
The other administrative tax reform proposal is for an independent tax court. Currently, the board of tax appeals or district court hears state tax cases, while district courts exclusively hear local sales tax cases. Also, in local cases, aggrieved taxpayers have to first pay under protest to get their day in court, which substantially increases their direct cost of litigation. Today, multiple courts generally hear state and local cases arising out of the same transaction, often resulting in varying and inconsistent decisions and interpretations of the same substantive tax laws.
Under this tax reform proposal, the tax court would be an independent tribunal comprised of judges with tax knowledge and experience. Additionally, one forum would hear state and local cases on the same facts and circumstances, leading to the rendering of consistent and uniform rulings on the same subject matters.
As session approaches and much of the discussion continues to focus on the revenue side of the proposal, these administrative reforms should not be overlooked. Passage of these administrative proposals could greatly improve our business climate and rankings, as well as ease the burden on businesses as tax collectors.
John LeBlanc, LABI’s Director of the Taxation and Finance Council, contributed to this column. Follow his tweets during the session @LABILeblanc.