BATON ROUGE, La. — Louisiana lawmakers on Thursday postponed a vote on a key bill in Governor Jeff Landry’s sweeping and complex tax reform package.
Most of Landry’s bills, which authorize about $2 billion in income and corporate tax cuts, passed smoothly through the House of Representatives during the state’s term in office. third special legislative period of the year. But lawmakers have expressed more opposition to a sales tax on dozens of services, such as mowing lawns, getting tattoos and using coin-operated washing machines.
The filing of the bill, which would have raised an estimated $500 million to close the revenue gap left by the tax cuts, raises questions about whether Landry and his allies have gathered enough support. The Republican Party-dominated House requires 70 of its 105 members to vote in favor of the bill.
“I think the bill addresses life support, if it’s not already dead,” said Republican Rep. Joe Stagni.
As he left the House chamber Thursday evening, Landry denied there were not enough votes to pass the bill.
“Never go to the kitchen halfway through the meal, but review it once it’s done,” Landry said.
Rep. Julie Emerson, who is responsible for a number of tax reform bills, said some of her colleagues were outright opposed to the entire bill to raise taxes on services, while others had issues with taxing specific services.
During committee hearings, lobbyists have argued that the proposed services to be taxed, including property repair and maintenance, would increase costs for small businesses and increase insurance rates.
But lawmakers in the House of Representatives voted 71-23 in favor temporary increase in sales tax by 0.40% permanent. Lawmakers eliminated 0.05% to lower the state’s proposed overall sales tax rate to 4.40%. They also planned to withdraw dozens of tax breaks but would prevent household groceries from being taxed.
That sales tax expansion would generate about $820 million in annual revenue.
“With a sales tax, a person has a choice,” said Republican Rep. Mark Wright, who sponsored the increased sales tax bill. “With an income tax there is no choice.”
Some budget conservatives have signaled their opposition to imposing new sales taxes on services, with a small group of Republicans voting against a permanent sales tax increase.
A group of Democratic lawmakers have also argued that the sales tax expansion will weigh more heavily on lower-income households.
Louisiana’s tax system is one of the most regressive in the country, with lower-income families paying a higher percentage of their income in income and sales taxes than wealthier households, according to research from the left-leaning Institute on Taxation and Economic Policy. A study funded by a coalition of nonpartisan economic policy groups found that the proposed reforms would make the existing system slightly more progressive, but did not take into account potential increases in local sales taxes.
Landry has said the tax reform is modeled after the policies of states like North Carolina and Texas, which he said rival Louisiana economically. He has said that passing the tax reform package will make the state more attractive to job-generating companies, and his allies point out that the Tax Foundation, a conservative think tank, currently ranks Louisiana 40th in tax competitiveness.
Some lawmakers have questioned whether the proposed taxes on numerous services can be effectively enforced.
Republican Rep. R. Dewith Carrier, who represents several parishes in southwestern Louisiana, said during a Nov. 13 committee hearing that he did not believe his constituents would fully comply with the new sales taxes.
“Don’t count on my district to do it. These guys, they take cash, they trade it for a fifth… vodka or food stamps,” he said.
On Wednesday, the House of Representatives passed a bill to reduce corporate taxes from a flat rate of 7.5% to 3.5% and another bill to add new taxes on digital goods and services such as online streaming sites, which expected to generate approximately $40 million per year. They also passed bills eliminate the 0.275% corporate franchise tax – worth more than $500 million in annual revenue – and to flatten the individual income tax to 3%, costing the state about $1.3 billion in revenue.
On Monday, the House of Representatives will vote on the submitted proposal to expand sales tax to dozens of services.
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Brook is a corps member for The Associated Press/Report for America Statehouse News Initiative. Report for America is a nonprofit national service program that places journalists in local newsrooms to report on undercovered issues. Follow Brook on social platform X: @jack_brook96