A Suggestion On Centralizing Sales Taxes…

Last year, our readers will remember, there was a constitutional amendment on the ballot in Louisiana which would create a hybrid state/local government commission charged with providing businesses with a one-stop-shop with which to interact in processing sales taxes in Louisiana.

The measure failed in the November elections last year by a 52-48 count. There were only just under 414,000 votes cast on it statewide, a 14 percent turnout in an election cycle which had very little to drive people to the polls (three special elections were held for state legislative seats and voters in Orleans Parish elected the mayor, city council and sheriff).

House Speaker Clay Schexnayder was undeterred by the result and he’s pushing essentially the same bill again this year. But HB 681 changes a little bit of language which got him in trouble with four of the local government special interest groups – the Louisiana Sheriffs Association, the Police Jury Association of Louisiana, the Louisiana Municipal Association and the Louisiana School Boards Association. The directors of those groups sent Schexnayder a pointed letter griping about the changes. “A close reading reveals key differences that our organizations oppose,” said the letter.

The four didn’t take a position on Schexnayder’s constitutional amendment last year. He had to bend over backwards to them in order to set up the unwieldy eight-person committee charged with standardizing sales tax collection practices across the 64 parishes and innumerable jurisdictions and taxing districts across the state last year.

And when Schexnayder got that letter he threw a fit. From a letter he sent to the four…

“It is disappointing and disheartening that at the last minute your organizations have now decided to reverse course and oppose this critical piece of legislation that put Louisiana small businesses on an equal playing field with their out-of-state competitors. My hope is that your four organizations, which want the process to remain burdensome and unchanged for Louisiana businesses, come to the table with a tangible solution to your perceived problem.”

The thing is, Schexnayder is right about this issue. Louisiana’s sales tax collection system, as constructed in the current state constitution, is trash. It isn’t competitive with other states and as such it’s disadvantageous to do business here as opposed to elsewhere. The fact that we have the highest combined state and local sales taxes in America isn’t the whole problem; it just punctuates how bad things are.

As a Louisiana business you have the most complicated system of collecting the most onerous sales taxes in the country. It’s almost an achievement to make it this bad. Schexnayder ought to be applauded for at least trying to fix it.

But he isn’t going to fix the problems that screwed up the passage of the constitutional amendment with the changes he’s made. Playing around with the language only gets you sniping from the locals, as we’ve seen.

The problem Schexnayder had last year is that Joe Sixpack Voter took a look at that bill last year, couldn’t make heads or tails of it, and either left it blank or voted no.

It was messaged as a way to make Louisiana’s businesses more competitive, and that’s why the business community was generally for it. Schexnayder was faulted for trying to bring it in an election cycle last year when LaToya Cantrell was poised to run away with the New Orleans mayor’s race and she was vocally opposed to the change, and rightly so. Last year’s bill probably passes this fall given the larger expected turnout.

But here’s what we would suggest after Schexnayder amends his bill to go back to last year’s language: throw in a hook for Joe Sixpack Voter.

This state has needed some sort of constitutional control on sales tax rates for a very long time. So throw one in.

Put in a provision as an amendment to HB 681 which bars state and local sales taxes in Louisiana from ranking worst in America. Have it trigger rate cuts across the board, or targeted to the worst-offending local governments, so that if Louisiana’s sales taxes rank worst in the nation there are automatic rate cuts at both the state and local level until we are one hundredth of a percent lower than the worst.

At least then as a voter you’ll know that if it passes your sales taxes will go down periodically.

The good news about this is it’s a constitutional amendment. John Bel Edwards can’t veto it. He surely would if it prevented him from being able to raise taxes, but in this case he’s not involved.

And if the LMA, LSA, PJAL and LSBA want to oppose the bill because it has a tax cut in it, well…by all means let’s make sure the voters know that’s their position. There are a whole lot of local elections next year, you know.

The idea of centralizing sales taxes in order to help business competitiveness is a good one and it should stand on its own feet. It should have passed last year. But the voters are in a selfish mood where it comes to government, and who can blame them after what government has been and is putting them through?

Centralize sales taxes, yes. But find a way to cut them. Do that and this bill will make law no matter what those lobbyists say.

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