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LABI talks details of proposed tax reform

Last Modified: Wednesday, March 06, 2013 9:48 AM

By John Guidroz / American Press

An official with the Louisiana Association of Business and Industry said Tuesday that LABI will keep a close eye on Gov. Bobby Jindal’s tax reform proposal and will spend time during this year’s legislative session defending the education and workers’ compensation reform measures approved last year.

Jim Patterson, LABI vice president of governmental relations, told local business leaders at a luncheon, that LABI has no position on Jindal’s tax reform efforts because no legislation has been filed. The governor’s plan includes removing personal and corporate income taxes and increasing sales taxes.

“We welcome discussion along these lines,” Patterson said.

The tax reform proposal would include removing $2.58 billion in individual income taxes and about $340 million in corporate franchise and income taxes from the state’s budget, Patterson said. He said the state’s 4 percent sales tax rate “will go up to some degree” to reach a point where revenue is neutral.

“The last (increase) I heard was 1.78 (percent), but that depends on what other areas they are able to find taxes from,” Patterson said.

Patterson said the proposal also includes increasing taxes on cigarettes, removing severance taxes and removing certain sales tax exemptions. But there will be no increase or removal of exemptions for food, prescription drugs or fuel. Sales tax exemptions for manufacturing and machinery, commercial and residential utilities and purchases by state and local agencies will also be left alone, Patterson said.

Patterson said Jindal wants to expand the state’s sales tax base and has mentioned Texas as an example. He said Jindal is considering taxing tickets to movie theaters, cable and television services, Internet access and home security services. Services like pest control and landscaping would also be taxed.

Sen. Dan “Blade” Morrish, R-Jennings, said he is not sure if the state needs tax reform, but it may “need some tweaking.”

“If you look where we are with national watchdog groups, Louisiana seems to fall in a good position,” he said. “Until we know what’s on paper, it’s hard to discuss.”

Morrish said tax reform “doesn’t fix, change or balance the budget,” and that it is a separate issue from balancing the budget.

House Speaker Chuck Kleckley, R-Lake Charles, said higher sales tax fees could put Calcasieu Parish “at a competitive disadvantage with Texas.” He said he expects Jindal to deliver legislation “within the next seven to 10 days.”

He said the House Ways and Means Committee is expected to review the measure March 19, several weeks before the legislative session begins April 8. He said the tax reform measure requires a two-thirds vote in the House and Senate.

“We feel this is a very complex bill,” Kleckley said. “We’re going to have plenty of time to hear both sides of the story.”

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