Tax Reform Continues
The big theme of the 2021 legislative session was Tax Reform. Voters kicked off the journey to reform by simplifying the tax code and lowering rates with their approval of Constitutional Amendment 2 on last year’s ballot. That was a big win, but only the first step.
We cannot stop there. While most of the next steps toward further simplification – or ultimately elimination – of the state’s personal income tax must wait until an odd-numbered year, per the state constitution, that doesn’t mean nothing can be done. Thanks to Speaker Clay Schexnayder and Senate Revenue and Fiscal Affairs Chairman Bret Allain, the legislature is moving toward meaningful reforms of the state’s equally-complex sales tax system.
Stop me if you’ve heard this one before: Louisiana is an outlier. We often wrote last year about the need to streamline sales tax collection. Not only that, but we’ve joined the National Taxpayers Union Foundation and the Goldwater Institute in representing Halstead Bead to sue the state and several parishes over Louisiana’s convoluted sales tax collection scheme.
Unfortunately, confusion about the policy and a challenging political environment led to the defeat of a Constitutional Amendment that would have made progress toward fixing that problem, but the fight isn’t over yet. Speaker Schexnayder brought a version of that proposal again this year.
However, reform efforts didn’t stop there. Chairman Allain moved four important measures aimed at providing transparency and fairness in the system while beginning the process of simplification:
–SB244 requires uniform reporting from all tax collection entities relative to their collections as well as the cost of collection. This common-sense proposal is similar to a recent transparency measure by which the state’s court system must now report.
–SB235 allows parishes to contract voluntarily with the existing Remote Sellers Commission to collect in-state sales tax. While the Speaker’s Constitutional Amendment would start the process to mandate streamlined collections, this allows parishes who wish to opt in to start simplifying burdens on taxpayers.
–SB242 (Now Act 87 after the Governor’s signature) equalizes the interest rates for taxpayers and governments when there is under- or over-payment of taxes. Previously the scales were tipped ridiculously for the government, requiring taxpayers to pay dramatically higher interest rates than the government.
–SB95 streamlines the audit process for taxpayers by allowing businesses to opt into a multi-parish audit all at one time, rather than facing a barrage of audit requests over time.
These reforms are common-sense measures to reform Louisiana’s current ridiculous system. More work is required across the board, but all of these reforms represent meaningful progress in favor of taxpayers and job creators.
But, as the legislature adjourns sine die to wrap up this session, the work begins in earnest to craft significant tax reform in 2023. Of course, with an election looming and an uncertain economy in front of us, some politicians may try to block meaningful reform, we must push forward. As our neighbors in Mississippi and Arkansas make significant strides toward income tax cuts and phase-outs, we MUST make bold strides if we are to meaningfully write Louisiana’s comeback story and bring jobs and opportunity back to our state.
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