BATON ROUGE, La. (BRPROUD) – Louisiana legislators are analyzing the state’s tax structure.

While one lawmaker proposes doing away with income tax, others believe change needs to be made elsewhere.

Rep. Richard Nelson, R-Madeville, wants to make Louisiana a state without individual income tax.

As Louisiana’s second largest revenue stream, state income tax brings in about $4 billion annually. The most lucrative revenue stream is sales tax, which provides the state with $4.2 billion every year.

While researching the possible changes, sales tax repeatedly comes up.

Louisiana has the highest sales tax in the nation. Though the state rate is 4.45%, the average local sales tax is 5.10%. Once combined, this launches Louisiana to the top.

In 2025, 0.45% of the state rate is set to roll off unless it’s renewed by the legislature. In 2018, the half cent tax was added to deal with the major deficit the state was facing.

“I think one of the most important points is the reason that sales tax is so high is not because locals love sales tax so much, it’s because they really don’t have a property tax base. If you look at the tax breakdown…it’s really that property tax is where we fall behind,” Rep. Nelson said.

The state also doles out a number of tax exemptions, credits, and rebates. For example, there is more money exempted for the corporate income tax than the state collects. The state collects an estimated $809 million and exempts about $1.4 billion.

Some lawmakers are quick to point out that even though removing those may appear to be an obvious move, doing so might result in unintended consequences.

“If we get rid of all our credits, exemptions, and deductions under our existing tax structure,” said Re. Beau Beaullieu, R-New Iberia. “That’ll be the quickest revenue loss we can have for our state because everybody will be packing up ready to move and our business will be relocating to other states.”

Some legislators who saw the turmoil of the budget process when Governor John Bel Edwards first took office warn of being cautious with tax reform now.

“When you start making changes you can only impact change on just a certain amount of it. When we say the budget has grown so much, well your federal dollars is half of that,” Rep. Malinda White, R-Bogalusa, said.

The Ways and Means Subcommittee on State Tax Structure will conduct several additional meetings prior to the next legislative session.

These will break down each of the different tax revenues to analyze where cuts can be made, if at all.