Louisiana lawmakers have approved a tax reform package that will result in lower income taxes for working individuals, but a higher state sales tax rate. The individual income tax rate would be a flat three-percent rate. The standard deduction would triple $12,500 dollars. Leesville Senator Mike Reese says this tax change will help grow the economy.
“Every citizen has an opportunity to perform well in this state, be successful in this state and to those citizens that have left this state, we are going to set this economy up and we are going to set a tax structure up that will invite you back to our state,” Reese said.
Most Democrats also supported the tax code overhaul, even though the state sales tax rate will increase from 4.45 percent to 5 percent for the next five years. Lafayette Senator Gerald Boudreaux is the Chairman of the Senate Democratic Caucus.
“The temporary tax for five years, gives the state the opportunity to look into the forecast and see how we can look at making additional adjustments,” Boudreaux said.
The cut in income taxes would result in a one-point-three billion dollar annual loss in revenue. The state will get most of that back by raising the state sales tax to five percent. Also getting approved on Friday, charging state and local sales taxes for streaming services and online games.
The film tax credit program has been capped at 125-million dollars, down from 150-million. Legislators also voted to repeal the corporate franchise tax. Foil says this tax penalized businesses.
“If a business does well they have to pay more franchise tax, it’s a disincentive, we are an outlier as far as this tax is concerned,” Foil said.
The tax section of Louisiana’s section has also been changed, which will require voter approval in March.
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