A key backer of Gov. Bobby Jindal’s plan said Thursday that if state retirees actively oppose the proposal to revamp the Louisiana’s tax system, the overhaul likely wouldn’t pass.
“The practical truth is that it’s not going to pass if every retiree in the state of Louisiana is opposed to the bill. So there is going to be a fix for the retirees,” state Rep. Joel Robideaux, who as chairman of the House Ways and Means committee likely will sponsor the legislation once it’s filed, told a forum sponsored by Leaders With Vision.
Jindal is seeking to abolish state income taxes in favor of higher sales tax rates, possibly higher tobacco taxes and a widening list of services to be taxed by the state along with the elimination of some of the more than 400 tax exemptions.
The governor wants the tax revamp to be “revenue neutral,” meaning the state wouldn’t lose money or gain money because of the rewrite. The elimination of the personal income tax and the corporate income and franchise tax would remove about $3.2 billion from the state’s revenues.
The governor is meeting with legislators ahead of the legislative session that begins in April. He has released few details to the general public on how he plans to make his tax elimination plan “revenue neutral.”
Robideaux said that retired state government workers don’t pay income taxes and many other retirees, living on pensions and investments, often pay little, if any, income taxes.
“If there is an increase in sales taxes, obviously, they don’t get any benefits from the repeal of income tax and they would actually be paying more sales tax,” Robideaux said. “But we are working on a few different options that’s going to be incorporated into the bill.”
He would offer no specifics about the options being considered.
State Rep. John Bel Edwards, D-Amite, countered that in order for the numbers to work — and stay “revenue neutral after income taxes are abolished” — the administration has been saying that a 1.78 cent increase in the state’s sales tax will be necessary. But finding accommodation for retirees was not calculated into that amount, he said.
“Somebody is going to have to pay and its going to be people like you,” Edwards said, probably in the form of higher sales taxes.
“I view this as a tax increase on most individuals,” Edwards said.
Jason DeCuir, a lawyer with the state Department of Revenue, said Edwards’ argument was incorrect. “The reason is what I just talked about: Expanding the sales tax base to include services. The the more items you bring into the base, the more revenues the state raises,” DeCuir said.
DeCuir said the administration is looking at eliminating a number of exemptions including the one that keeps energy producers from paying some severance taxes, which are the taxes paid on oil and gas extracted from Louisiana.
Robideaux agreed with panelists Jim Richardson, an LSU economist, and Jan Moller, director of the Louisiana Budget Project, both of whom argued that sales taxes are a regressive form of taxation in that it places a greater burden on lower income and middle class consumers.
“If there is a larger burden on the poor or the working poor in the bill, it is not going to pass. It’s dead on arrival,” Robideaux said. “There is a lot of effort being made as we try to figure out how this may work, to make sure that the poor and working poor are better off under the proposed, than under the current system.”
Robideaux said he is confident that individuals probably are going to come out better under the new plan than under the current taxing system.
“Now who pays for that? Well, as we floated some ideas out there, smokers will pay for that. Some of the industries aren’t too happy with the proposal right now. Oil and gas, they may be paying some of that,” Robideaux said. “There are folks out there who are not going to be winners.”