Fiscal cliff. New taxes and severe cuts. Narrow escape. Rinse, repeat. This has been the budget cycle in Louisiana for years, but lawmakers finally reached an agreement at the end of the final special session last month.
As of July 1, Louisiana’s new sales tax rate is now 4.45 percent. It was scheduled to fall to 4 percent from the temporary increase to 5 percent that was enacted in 2016 as a short-term budget solution, but lawmakers renewed 0.45 percent of the expiring tax for seven years. This had been a point of contention for months as lawmakers discussed ways to bridge the pending budget gap as well as stabilize the state’s finances. Some wanted the full penny to expire, and some wanted to renew 40 or 50 percent of the penny; in the end, they compromised on 0.45 percent.
In addition to the new sales tax rate reduction to 4.45 percent, business utilities previously exempt from sales tax and recently taxed at 4 percent will now be taxed at 2 percent going forward.
“This change represents both a reduction in sales tax and a bit of stabilization in the budget crisis since it will be this way now for seven years,” NFIB/LA State Director Dawn Starns said.
Plus, Louisiana can now expect an extra boost of sales tax revenue now that the U.S. Supreme Court ruled that states can tax online sales even if the businesses doesn’t have a physical location in state. This can also help level the playing field for small business owners who were competing with online retailers who didn’t have to charge tax.
