Jim Beam column:Amendment No. 1 is winner
Published 7:33 am Sunday, September 26, 2021
Louisiana voters will decide the fate of four constitutional amendments on Nov. 13, and No. 1 seems to be the most controversial of the four. However, it is a tax reform measure that should have been enacted years ago.
Amendment No. 1 would allow a single authority to collect state and local sales taxes. The state Department of Revenue currently collects the 4.45 percent state sales tax and local governments collect their own sales taxes that average around 5 percent.
The National Federation of Independent Business (NFIB) calls the current sales tax collection system one of the worst in the country because of its high sales tax rates and the complexity of the tax code. The amendment doesn’t change the 9.55 percent state and local sales tax rate that Tax Foundation said is the highest in the country.
NFIB said Louisiana is one of only three states without a centralized sales tax collection system. That is because, as the Public Affairs Research Council (PAR) says in its amendment guide, “local governments have clung tightly to their constitutionally protected right to collect them.”
The amendment creates the State and Local Streamlined Sales and Use Tax Commission. Its eight members would be appointed by the Louisiana School Boards Association, the Louisiana Municipal Association, the Police Jury Association of Louisiana, the Louisiana Sheriffs’ Association, the secretary of the state Department of Revenue, the governor, the speaker of the state House and the president of the state Senate.
PAR has explained the major reason a number of local government agencies aren’t happy about the amendment. It said although nearly all other states with a sales tax have a centralized collection system, they don’t rely as heavily on sales taxes. That’s because of Louisiana’s homestead exemption that results in low property taxes.
Local officials opposed to centralized sales tax collections say they know local business behavior better than anyone else. They also worry about getting their tax revenues later than they have been.
The House passed Amendment No. 1 with a 97-4 vote. Rep. Rodney Schamerhorn, R-Hornbeck, was the only representative out of this area’s nine House members to vote against the amendment. The Senate vote was 37-0.
Voters who may be opposed to the amendment need to remember the job will only be half done if they approve it. The Legislature will have to enact the new commission’s operating details in state law. Like the amendment, that will require a two-thirds vote.
Rep. Beau Beaullieu, R-New Iberia, handled the centralized tax amendment for House Speaker Clay Schexnayder, R-Gonzales. Beaullieu said the state is rated 49th in the country in sales tax administration.
Schexnayder said he has always protected the interests of local government agencies. He asked lawmakers to think about the businesses back home that will benefit from the streamlined sales tax collection system.
The state currently has 54 sales tax collectors who collect those taxes for over 190 taxing jurisdictions.
The new commission is composed of four local and four state appointees. They will set up the system, send the revenues to the collector for each local taxing authority, set policies and write the rules. Each parish assigns a single tax collector to distribute revenues to agencies and their jobs will continue under the new system if it eventually goes into effect.
Tax Foundation ranks Louisiana 42nd in the country in terms of its tax climate for business. Stephen Waguespack, president and CEO of the Louisiana Association of Business and Industry, explained why the ranking is so poor.
“It forces a small to midsized business in Louisiana to go out and hire an army of CPAs and attorneys to just comply with the confusing tax code,” he said. Waguespack adds that the centralized system may even result in more revenue for some local governments.
Louisiana appears destined to have higher sales taxes than most states because of its low property taxes and the refusal of Republican legislators to raise state income taxes. My city and parish property taxes, for example, were only $688 last year.
High sales taxes do hurt low-income earners, but they are the only revenue source left to pay for many essential services benefitting all citizens. The state needs this centralized system for collecting state and local sales taxes. Louisiana businesses and the state’s tax climate will be the beneficiaries.