Gov. Bobby Jindal delivers a speech to the lawmakers in Baton Rouge Monday. He said he has shelved his plan to eliminate income taxes and raise sales tax. (Associated Press)
Last Modified: Tuesday, April 09, 2013 9:36 AM
BATON ROUGE (AP) — Gov. Bobby Jindal told lawmakers Monday that he's shelving his tax swap proposal, rather than risk an embarrassing defeat of a restructuring plan that drew ire across the political spectrum and from business leaders.
But the Republican governor isn't giving up on his push to eliminate Louisiana's income taxes on individuals and businesses, just the part of the plan that had a specific list of ways to replace the lost income tax revenue, including an unpopular sales tax hike.
Jindal told lawmakers on the opening day of the annual legislative session that he wants a plan to get rid of the income tax, suggesting he'd support a phase-out approach offered by several lawmakers — without offering any further parameters.
"Even if we park our plan, I'm calling on you, let's work together, let's pass a bill this session. Let's get rid of the income tax," the governor told a joint meeting of the House and Senate. "Send me that bill to get rid of those taxes."
Jindal's decision to scrap a tax package he announced nearly three months ago and traveled the state touting to business and citizen groups was a surprising acknowledgement of trouble for a governor who has regularly found success for his legislative agenda.
However, Jindal's poll numbers have plummeted, and his relationships even with Republican lawmakers have grown rocky, so a shift in tactic could give him a victory to claim when the two-month legislative session ends June 6.
Republicans and Democrats said they didn't believe Jindal had enough support to win passage of the tax swap that needed a hefty two-thirds vote, with some pronouncing it dead before the legislative session began.
"He punted it to the Legislature," said Rep. Jared Brossett, D-New Orleans. "He gave up on what was not a supported package."
Jindal had proposed to get rid of the income tax immediately, saying states attract more people and business development without the taxes. In exchange, he proposed increased sales taxes charged on more items, boosted tobacco taxes and removal of some tax breaks.
The package encountered widespread and bipartisan opposition, criticized by religious leaders, the state's leading business lobbying group and the governor's own hired economic consultants.
Rep. Joel Robideaux, chairman of the House Ways and Means Committee and sponsor of the governor's tax proposals, said he warned Jindal administration officials that "the Legislature had serious reservations about the bills."
Jindal acknowledged he heard complaints from lawmakers and around the state.
"I heard them say, 'Governor, we do want to get rid of the income tax. We think that's great. But we also are worried you're moving too quickly, and we're not sure your plan is the best way to do it.' I want you to know first of all that's certainly not what I wanted to hear. But I heard those comments. And we're going to adjust our course," he said.
Concerns centered on the size of the sales tax increase and a proposal to charge the tax on services, like haircuts, car repairs, sports tickets, park visits and the services charged from one business to another.
The sales tax hike would have made Louisiana's average combined local and state sales tax rate the highest in the nation, generating concerns about its impact on the poor. The proposal also was estimated to shift $500 million in tax costs from individuals to businesses, raising concerns it could harm business.
"There's no doubt that there was no support in the state of Louisiana, in the business community, in our churches, in either political party for the highest sales tax in the nation and the most regressive tax structure in the nation," said Rep. John Bel Edwards, D-Amite, chairman of the House Democratic Caucus.
What a new tax plan could look like remains unclear.
Jindal didn't offer ideas for what should be included, how long the tax repeal should take, or most significantly, whether the removal of $3 billion in income tax revenue would need to be offset with some other tax hike to gain his support.
The nonpartisan Council for A Better Louisiana urged lawmakers to "park" the entire tax effort this year, saying the two-month session was too short to come up with a reasonable plan for repealing the income tax without cratering the state's budget.
"We believe starting all over in the limited time frame of the current legislative session would be a daunting task at best and of great potential risk for the state at worst," CABL President Barry Erwin wrote in a Monday commentary.
Several lawmakers have offered proposals to gradually phase out the income tax over a decade, and various proposals have been filed to remove tax breaks, raise tobacco taxes and generate other kinds of tax revenue.
Lawmakers said the tight timeline makes it tough for deals to be struck for a full income tax repeal.
"I'm not going to be bold enough to say we're going to be able to get something all the way through the process, but it's certainly possible," said Robideaux, R-Lafayette, whose committee handles the tax bills.
Edwards said he is prepared to work with Jindal on a tax plan, but that the governor didn't offer up a plan or suggestions during his address. He referenced a quote he said Jindal made two years ago regarding another bill that sought to phase out the income tax as not being serious because it didn't address revenue or adjustment spending.
"So, I will just ask you. Are we supposed to take him seriously this year?" Edwards said.
Robideaux said he believes any tax repeal needs to include provisions for drumming up new state cash to offset the multibillion dollar loss. He said he wouldn't support the phase-out otherwise.
Posted By: Stormy Langley On: 4/9/2013
Title: WHY NOT X2
I totally agree with you sir. The tax would be much better placed on the money spent vs. the money earned. Then the free loaders who do not work/work for cash could help carry their part of this load. Spending more often than not is an elective choice, not a necessity. Taxing monies earned has never seem a good idea to me. As it stands now they tax the guy who pays your employer. Then they tax your employer for receiving it.Next they tax each of when we are paid by the same dollar, and yet still we must pay another tax to spend it. WOW!!! lets do away with the income tax and at least start getting a break somewhere.
Posted By: E W P On: 4/8/2013
Title: WHY NOT..
LET EVERYONE PAY TAXES (SALES TAX) AS OPPOSED TO JUST US WORKING FOLKS. (INCOME TAX)
Posted By: Steve Johnson On: 4/8/2013
Title: A Victory for the People
This was a very BAD proposal by a very poor governor who has no leadership skills and really just wants to look good so he can claim a Federal job one day in Washington. Everything he tries to do is a disaster. A really bad leader!
Posted By: Citizen On: 4/8/2013
Title: Slow down on everything
Moving too fast on the hospitals and education also. Why slow down for this and not the others? The hospitals need a new direction, but not trying to strong arm everyone to get it completed without a viable plan and as soon as possbile.