Analysis: Devising Roadmap For Tax Overhaul A Difficult Slog

BATON ROUGE (AP) — Two blown deadlines on a report due to lawmakers about ways to revamp Louisiana tax policy might be an ominous sign for the upcoming legislative debate on a topic that reaches into everyone's pocketbooks.

         The task force created by lawmakers to make recommendations for a sweeping tax overhaul has had to get two extensions to complete its work. The new due date for the report and its recommendations is Nov. 1.

         If the economists, tax experts and policy wonks have trouble reaching consensus on the best approach to Louisiana's tax structure, that only reinforces the expectation that lawmakers will have a rough time when it's their turn.

         "There are some things that we do that are clearly not good tax policy. But we have built these things up over such a period of time, it is difficult to untangle them," said task force member Barry Erwin, head of the nonpartisan Council for A Better Louisiana.

         He added: "What we're trying to do is get a pretty good roadmap of some things legislators can do to make our tax structure more stable, more predictable. But it's a difficult task."

         With a new governor and new lawmakers inheriting a massive budget mess as they entered office in January, the House and Senate only agreed to short-term tax fixes to fill financial holes, saying they needed more time to make structural changes to dig Louisiana out of its recurring financial troubles.

         Lawmakers, spurred by House leaders, set up the 13-member Task Force on Structural Changes in Budget and Tax Policy to chart a long-term path for redesigning Louisiana's tax structure. That is expected to be the main issue lawmakers tackle in the 2017 legislative session.

         In case they were inclined to delay long-term restructuring, lawmakers created for themselves a financial cliff reaching nearly $1.5 billion in 2018, when taxes passed earlier this year by lawmakers — mainly a 1 percent state sales tax increase — hit their expiration dates.

         Task force members have been working since March, spending long hours each meeting delving into complex discussions of tax policy enacted over decades.

         "We're looking at the business side, the individual side, low-income, upper-income, distribution of how you do these things, how you keep a balance of sales tax with income tax. When you're trying to put them all together and make them all balance out, it's more complicated," Erwin said.

         Revenue Secretary Kimberly Robinson, one of the group's co-chairs, said task force members wanted more time to gather data and negotiate recommendations. She said the group wants to fully vet ideas, considering the tax laws of other states, historical reasons for Louisiana's tax policy and the changing face of business in the state.

         "We're not attempting to rush through this," Robinson said.

         Some recommendations have found consensus.

         Robinson said the task force has agreed the state sales tax should drop from 5 cents on every dollar spent to 4 cents; the sales tax should be expanded to cover services, like cable television and residential repairs; and the state should get rid of the individual income tax deduction people get for the federal taxes they paid.

         Disagreement lingers on whether and how the task force should suggest changes to property tax laws, including a lucrative tax exemption that manufacturing facilities get from paying local property taxes and a pricey tax credit the state gives to businesses to refund the local property taxes they paid on their inventory.

         Also still up for discussion with the task force is the broader issue of how the state should rework its tangled tax and spending relationship with local government.

         Part of the task force's calculation involves considering what's politically feasible. On paper, many tax policies may seem ripe for change, but experience suggests such change could be nearly impossible to get through the Louisiana Legislature.

         "We're trying to give them something that's at least somewhat realistic or somewhat practical to do," Erwin said.

         Robinson said she's confident the task force will complete its work before the November deadline. Then, the real debate begins among state lawmakers.

         – by AP Reporter Melinda Deslatte



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