Last Friday, State Rep. Christopher Leopold (R-Belle Chasse) prefiled a bill to grant a special sales and use tax exemption to the Committee for Plaquemines Recovery. The organization has been building homes throughout Plaquemines Parish since Hurricane Katrina and the many other storms which have hit. By all accounts, the organization does good work.
Leopold’s bill, HB 99, would grant this organization a special tax break that only Habitat for Humanity and Brad Pitt’s Make It Right Foundation receive. The bill would grant CPR an exemption from the state sales and use tax exemption on construction materials.
Would it the cost the state and parish governments a lot of money? My guess is probably not, but there is no fiscal note to the bill yet.
Is this bill a good idea? Just like granting the tax exemptions to Habitat for Humanity and the Make It Right Foundation, not really. Here’s why, every time you grant a special tax exemption to any organization, even groups that do good work like CPR, you have to raise tax rates for every0ne else. The loss in tax revenue has to be made up for somehow, either in reductions in government services or higher taxes.
To lower taxes for everyone, we need to get rid of the many exemptions in the tax code. Nearly every exemption has a “good argument” for it and this one is no exception. We already give non-profits with special tax treatment by allowing them to be classified as non-profits.
When you take the emotion out and think about it, the possible arguments for this tax exemption fall flat. Normally, sales and use tax are not charged to retailers who prepare a product for sale. The reason is that when a retailer sells a product, they collect the sales tax there. CPR, along with the other charities, are not selling a product; they’re giving away or rebuilding houses. Why should they get the same tax treatment as retailers?
Despite the best intentions of Rep. Leopold and the good work that CPR does, the Louisiana legislature should reject HB99. Better yet, the Louisiana legislature should revisit and remove the tax exemptions that Habitat for Humanity and Make It Right Foundation receive.
If Louisiana will have tax reform, we to get rid of everybody’s exemptions. That’s the only way Louisiana will become competitive.