A proposal to phase out the centerpiece of a seven-year tax deal enacted last year to stabilize Louisiana’s budget started moving Monday in the House, over the objections of Gov. John Bel Edwards.
The House Ways and Means Committee advanced the measure by House Republican leader Lance Harris without objection. Harris argued two years of back-to-back surpluses suggest the Democratic governor and majority-GOP Legislature went too far in its passage of taxes and fees. He wants to scale down the 0.45% state sales tax passed last year.
“We might be extracting too much money out of the taxpayers’ pockets,” said Harris, of Alexandria. “It may be time to give taxpayers a little bit of relief.”
Despite the ease of passage in the House tax committee, the legislation remains a longshot for passage.
Senators have stalled another proposal to rework the 0.45% state sales tax, saying it was too soon to start tweaking a tax deal reached after seven special sessions across three years. And Edwards opposes rolling back the tax earlier than its mid-2025 expiration date, saying it would upend a compromise that ended nearly a decade of budget gaps.
Revenue Secretary Kimberly Robinson testified against the bill on Edwards’ behalf. She said the surpluses come from better-than-expected corporate and personal income tax collections and have nothing to do with the sales tax rate.
“I urge you to consider the impact you would have on the stability we have reached in the state,” Robinson said.
Harris’ proposal would phase out the tax by mid-2023, stripping $87 million from state coffers starting on July 1, 2020. That figure would grow to $392 million by the fourth and final year of the phase-out.
The legislation heads next to the House floor, but could be diverted to the House budget committee for a second review. Even if the proposal never reaches the governor’s desk, Republicans are using it to slam Edwards’ record on taxes in an election year where he faces two GOP challengers on the Oct 12 ballot.
The 0.45% state sales tax rate replaced an expiring 1% temporary sales tax that was slated to fall off the books last year, moving Louisiana’s sales tax rate to 4.45%. Harris voted against the 0.45% sales tax when it passed last year, backing a renewal rate instead.
Though they didn’t object to the bill, committee Democrats raised concerns about its impact.
“We’ve been in deficits and budget crises. This is the first time we’re not in one (for years). It’s been refreshing,” said House Democratic leader Robert Johnson, of Marksville. He added: “I don’t know why when the ship is finally not sinking that we just want to jump overboard.”
Republicans said they worried about state government’s growth. Harris said Louisiana is receiving $2 billion-plus more from taxes and fees than it received five years ago.
“It’s time to go ahead and ratchet this down,” Harris said.
House Bill 599: www.legis.la.gov
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