As the Louisiana Legislature works to right the state’s financial ship, one major item on the agenda this legislative session is dealing with the sky-high and convoluted sales tax system.
House Bill 220, sponsored by Rep. Tanner Magee, would lower the rate and eliminate many of the confusing exemptions, thereby expanding the sales tax’s base. Under the proposal, 3 percent of the 5 percent state sales tax rate would be repealed and the suspension of exemptions approved during last year’s special session would become permanent.
Rep. Magee told Houma Today, “The exemptions have gotten out of control. I am not saying all these exemptions need to be eliminated; some actually may be warranted. We must start with a clean slate and evaluate each of these on a case-by-case basis.” Ultimately, Magee aims to eliminate unnecessary exemptions, broaden the tax base, and lower the rates.
Although a fiscal note for the bill projected a $2.7 billion revenue loss in fiscal year 2017-2018, if exemptions were ended as Magee proposes, that number would be lower. All state sales tax exemptions total $2.7 billion, with some being protected by the state constitution, including food purchased for home consumption, prescription drugs, and residential utilities.
NFIB/LA supports HB 220, American Press reported, and State Director Dawn Starns has said she’ll work with lawmakers to improve the bill. It’s currently with the House Ways and Means Committee.
