Beam: Jindal tax plan complex puzzle

By By Jim Beam / American Press

Louisiana legislators weren’t too keen on doing away with the state’s income tax two years ago, but Gov. Bobby Jindal wasn’t

actively involved in that effort. Whether the situation will be different now that the governor is putting the full force

of his office behind the idea remains to be seen.

Actually, the repeal legislation

proposed in 2011 was pretty tame stuff, but it still died on the vine as

the session ended.

Former Sen. Rob Marionneaux, D-Livonia, wanted to repeal the

income tax over a 10-year period. That makes a lot of sense when

you’re playing with the loss of revenues totaling nearly $3

billion. However, he had to weaken his plan when it appeared his

phaseout bill wasn’t going anywhere.

The amended Marionneaux legislation

simply set up a commission to study the possibility of reducing or

eliminating the state’s

income tax. It would have reported its findings to lawmakers by

Jan. 6, 2012. It took seven votes before senators would even

agree to consider the bill, but the House refused to go along as

the session ended.

Some of the reluctance to eliminate the state income tax can be attributed to the fact Louisiana’s tax is low when compared

to other states that levy income taxes. That is one of the reasons why Kiplinger.com, the company that has been publishing

a financial and business newsletter since 1923, ranks Louisiana as one of the 10 best states for retirees. It also has the

state as one of the top five with the highest state-local sales taxes.

Both of those are critical factors when

considering changes in the state’s tax structure. One of the proposals

being floated

by the Jindal administration would raise the already-high state

sales tax by nearly 2 percent. Louisiana ranks third highest

in the country with a combined state and local sales tax average

of 8.87 percent. Only Tennessee (9.44 percent) and Arizona

(9.16 percent) are higher.

An additional $1.05-per-pack increase

in the existing 36-cent cigarette tax is also a key part of the

governor’s package.

Supporters see that as more than a revenue producer. They believe

it will effectively curb smoking, particularly among teenagers.

Jindal also wants to eliminate many of

the sales tax exemptions on the books. Marionneaux said during his

unsuccessful effort

to repeal income taxes in 2011 that the state had $7.1 billion in

tax exemptions and credits, and many of them could be eliminated

to make up for lost revenues. The former senator made his point by

standing atop a ladder in the state Senate to unfurl an

extremely long list of those exemptions.

Spokesmen for the governor have repeatedly said there will be no effort to do away with state sales tax exemptions on household

groceries, residential utilities and prescription drugs. You bet they won’t try because it would take a vote of the people

to remove those exemptions, and it isn’t going to happen. Former state Rep. Vic Stelly of Moss Bluff said his 2002 income

tax plan put those exemptions in the state constitution so they couldn’t be easily removed.

A fourth area being considered is

making sales taxes apply to services that aren’t currently being taxed.

The administration

is looking at what services are being taxed in Texas, our closest

competitor for new business and industry. Consumers in the

Lone Star state pay sales taxes on cable and satellite TV services

and on credit reporting, data processing, information,

security, custodial and janitorial services. Taxing home repairs,

lawn work, dog grooming, massages, carpet cleaning, pest

control and boat storage are other services under review.

Online sales are also being eyed, but Congress would have to get into the act for that to happen. U.S. Sen. Mary Landrieu,

D-La., and 52 other congressmen backed a bill Thursday that would tax Internet commerce, but it is a high hurdle to climb.

A similar measure got nowhere during the last Congress.

What does the state get in return if the state income tax is repealed and some of the proposed taxing ideas are adopted? Tax

Foundation reports Louisiana currently ranks 32nd in business tax climate, and the state would climb to fourth place.

Dan Juneau, president of the Louisiana

Association of Business and Industry, in a recent column questions

whether that is

a real plus. He said almost $70 billion in new plant locations

have been announced for Louisiana. He added that construction

and oilfield services could be taxed under Jindal’s proposal.

“Have the companies which have announced the plant locations (largely due to the availability of low natural gas prices) figured

a 10 cent or higher combined state and local sales tax into their investment plans for Louisiana?” Juneau asked. “If such

a levy comes to pass it could have significant economic development consequences of its own.”

Jindal insists his administration hasn’t formulated a final plan, but is simply seeking input by throwing out a number of

proposals.

“Everything is on the table,” he said last week in a rare news conference for Louisiana reporters. “That’s the way it should

be,” he added.

Maybe so, but that is what worries a

lot of people. Jindal said it won’t happen this time, but he has a habit

of coming up

with his final legislative plans at the last minute and ramrodding

them through a more-than-willing-to-oblige Legislature.

Trying to find ways to replace $3 billion in state revenues is

risky business that deserves long and serious consideration.

Just this once, we can only hope members of the Legislature won’t be as anxious as they have been in the past to do Jindal’s

bidding without asking some serious questions.

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Jim Beam, the retired editor of the American Press, has covered people and politics for more than five decades. Contact him at 494-4025 or jbeam@americanpress.com