Yesterday, Governor Jindal appeared before two legislative committees to give more details about his tax plan. While it is a worthy objective to eliminate income taxes, Louisiana cannot afford the label of having the highest sales taxes in the nation.
In exchange for removing corporate and personal income taxes, the Governor wants to raise state sales taxes to 5.88% and increase cigarette taxes by $1.05 per pack.
Just last year, the Governor refused to support a plan that increased cigarette taxes; however, he is now embracing the “sin” taxes in exchange for the removal of income taxes.
By eliminating the income taxes, the state will be losing $2.7 billion in annual revenue. In his plan, the Governor replaces the lost revenue with more than $2 billion in sales tax increases, sin taxes and increased taxes on industries such as film and oil and gas.
The worst part of the Governor’s plan is the expansion of sales taxes into services such as accounting, pet grooming, massages, lawn maintenance and hair styling. Also, sales taxes will be incorporated into other areas such as cable television bills.
Already our local and state sales tax rate is among the highest in the nation. If the Governor’s plan is enacted, it will become the highest tax rate in the country, according to the Tax Foundation. In New Orleans, the sales tax rate will reach 11%. This will hurt the tourism industry in New Orleans, which is the biggest engine of economic growth for the city. The tourism industry is responsible for at least 75,000 jobs in the New Orleans area. It has been booming in recent years, but the increase in sales taxes will certainly be a hurdle to future growth.
While the Governor will provide sales tax rebates for the poor and the elderly, his plan hurts the working people of the state, the middle class that is the backbone of our economy. It will also negatively impact many small business owners who operate on a very small margin. They cannot absorb the tax increases as easily as big box stores with a national presence.
The best idea is to move forward with the removal of income taxes and reduce the size of the state budget by $2.7 billion. Louisiana’s state budget is too large and our state has too many employees. There are plenty of examples of waste, fraud and abuse to cut. In addition, we have rampant duplication of services such as five boards of higher education and 16 colleges and universities, more than the state of Florida, which has four times the population of Louisiana.
Let’s hope the Louisiana Legislature makes major revisions to this plan and incorporates the positive aspects while refusing to saddle our state with the highest sales tax rates in the nation.
by Jeff Crouere
WATCH VIDEO OF GOVERNOR JINDAL TESTIFY BEFORE THE JOINT LEGISLATIVE COMMITTEE--BELOW
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