House Agrees To Edwards' $.01 Sales Tax Increase, But Only For 18 Months

BATON ROUGE (AP) — Lawmakers in the Louisiana House agreed Thursday to a short-term state sales tax hike that would raise hundreds of millions of dollars for the budget, supporting the centerpiece of Gov. John Bel Edwards' tax package.

         But as the special legislative session reached its midpoint, the majority Republican House gave the sales tax measure an 18-month expiration date. And lawmakers there took no action on several other tax increases sought by the Democratic governor to end the boom-and-bust cycles of the state budget.

         The sales tax measure, sponsored by Rep. Katrina Jackson, D-Monroe, would raise Louisiana's 4-cent state sales tax by another penny on every dollar spent, until Oct. 1, 2017.

         The proposal is seen as critical to the budget-balancing effort because it could kick in quickly and raise money immediately. It would begin April 1 on purchases, raising an estimated $200 million-plus for this year's budget and nearly $900 million yearly.

         Other measures sought by the governor to increase cigarette and alcohol taxes, boost costs on business utilities and scale back tax breaks for companies that pay property taxes on their inventory were stalled as lawmakers continued negotiations behind the scenes. Those measures are scheduled for debate Friday.

         The tax bills sent to the Senate so far would not raise enough money for the current financial year to keep the state from making steep cuts.

         The state's short-term problems are acute: Louisiana has a budget gap estimated at around $900 million that needs to be closed by June 30. Public colleges, health care programs and social services are threatened with deep reductions if new dollars aren't plugged into the hole.

         Next year's budget shortfall is even worse, estimated to top $2 billion.

         Edwards is proposing to raise more than $420 million in taxes for this year's budget, to combine with other short-term fixes and spending reductions across agencies. The tax bills approved Thursday by the House would get to about $290 million of that amount.

         The governor is seeking even bigger tax hikes for next year.

         Edwards also is proposing some long-term tax restructuring that could bump up the taxes owed by middle- and upper-income earners and change the way corporate taxes are charged. The administration says those ideas would put Louisiana on a stronger financial footing, allow tax revenue to grow with the economy and end giveaways that have the state paying more in tax breaks to business than it collects from them in taxes.

         Republicans, particularly in the House, are reticent about many of the proposals. And the Senate only can consider — or modify — tax measures that win passage from the House, making the action in the lower chamber of great significance to budget-balancing efforts.

         GOP lawmakers say they support efforts to restructure Louisiana's tax system to make it more competitive and to treat people and businesses fairly. But they say state government is bloated and in need of restructuring as well, and they want any tax measures coupled with deeper cuts and reform proposals.

         – by AP Reporter Melinda Deslatte



Categories: Politics, Today’s Business News