Scrapping income tax could lead to sales tax hikes
by ALLISON CRYER
Louisiana already has a higher than average combined local and sales tax rate, and now the governor proposes we hike rates even higher if his proposition to eliminate state income taxes is approved by legislators in April.
Today Louisiana ranks 38th in the nation for its 4 percent sales tax, according to a report released Monday by the Tax Foundation. However, the state has among the highest average sales tax rates charged by local governments.
That gives Louisiana the third highest combined local and state sales tax rates in 2013 at 8.87 percent, or nearly 9 cents on every $1 in sales, according to “State and Local Sales Tax Rates in 2013,” published by the Tax Foundation.
Louisiana Gov. Bobby Jindal recently proposed possibility of eliminating income taxes and replacing the lost revenues by increasing sales taxes. One proposed bill would repeal the Personal Income Tax and the Corporate Income and Franchise Taxes, which would be paid for by increasing the state’s sales tax rate from 4 percent to 5.78 percent, cigarette excise tax from 36-cents to $1.41 and eliminate severance tax exemptions, along with other ideas, according to the governor’s office.
If Louisiana already ranks third in the nation for combined local and state sales tax rates, the governor’s wish to eliminate state income tax while replacing it with an increase in sales tax will only place more of an undue burden on the taxpayer.
I am not saying that I oppose eliminating the state income tax, I just worry that the state will keep hiking up our already high sales taxes when they find the constant fluctuation in sales taxes can not be counted on to cover the budget gap each year as predicted. The state will be forced to raise the sales tax rate or cut even more services for citizens including the elderly and the mentally ill.
It seems like our governor is more concerned with how his actions will benefit his record on the campaign trail than the actual wellbeing of Louisiana citizens. For example, recently he traveled to Virginia touting that his education reforms in his home state were working brilliantly when many here would strongly disagree.
How do we know eliminating statewide income tax won’t be the scenario? It may look good on the books, but when you add in local taxes, Louisiana citizens could be paying more than citizens in other states.
If the proposals are approved, Louisiana citizens could be paying over 10 cents of every dollar in sales taxes, and that is if local municipalities and other taxing bodies don’t raise taxes to handle the rising cost of doing business when the state no longer can afford to fund repairs to roads and other projects that help keep businesses alive.
Just because a proposal looks good on paper, doesn’t not mean that it will work in reality. I think before legislators can make a decision in April on whether or not to eliminate the state’s income tax, we all need to be clear on what that move will look like in reality for all Louisiana citizens.
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