Is the tax reform package passed by the legislature good or bad for Louisianians? It depends on who you ask. Invest Louisiana director Jan Moeller says raising the state sales tax will hurt low-income workers.
Starting on January 1st, Louisiana’s graduated individual income tax system, which has a tax rate of 4.25 percent, will go to a single three-percent rate.
To pay for the tax cut, the state’s sales tax will go from 4.45 percent to five percent.
“Louisiana already has the highest sales tax rate in the country and the legislature at the last minute decided to drive that rate up even higher,” Moeller said.
The legislation approved last Friday calls for the state’s sales tax rate to drop to 4.75 percent in 2030. Moeller is not a fan of this plan.
“They made permanent changes to the state constitution and permanent cuts to taxes, but that these revenue increases that are supposed to pay for them are temporary,” Moeller said.
On the other hand, Daniel Erspamer, the CEO of the Pelican Institute, calls the tax plan a big victory for taxpayers.
“Lower taxes for every taxpayer, simplify the tax code, repeal the corporate franchise tax, constrain recurring spending and really lead to renaissance to economic growth here in Louisiana,” Erspamer said.
Governor Jeff Landry originally proposed to tax 41 services that are currently not taxed., but that bill did not pass. Erspamer says the debate over sales taxes is not over yet.
“I believe we’ll still hear some debate in the regular session about potentially expanding the sales tax base to include other services in order to lower the rate, but that will be a debate that will pick back up in April,” Erspamer said.
A regular fiscal session will begin on April 14th.
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