Because of term limits in the State Capitol, the follies of the past are too easily forgotten. Unfortunately, some of those mistakes are now being recycled as political expedients for addressing the state’s No. 1 problem, an inefficient and unreliable tax system.
The last thing we ought to do: Renew the “temporary” one-cent sales tax increase that was adopted in 2016.
Gov. John Bel Edwards says he's flexible on tax ideas to close a $1 billion budget gap and stave off deep cuts to services. But he is exactly right to be inflexible, or close to it, on long-term renewal of the 1 percent sales tax.
Since April 2016, the tax has filled much of the budget shortfall. It is a “clean” penny in Capitol parlance, without some of the exemptions for purchases that apply to the state’s other four pennies of sales taxes.
That extra penny also gives Louisiana the unfortunate distinction of having the highest state and local sales tax rate in the nation.
Edwards, a Democrat, said the temporary sales tax was planned as a bridge to a larger rewrite of Louisiana's tax laws, which hasn't happened — in large part because Republican leaders in the state House have blocked changes. The House has routinely ignored the task force recommendations of economists and tax experts that it commissioned, who said the sales tax was bad policy and out of step with other states.
The governor is precisely right: The sales tax hike more heavily hits the poor. It is also a business tax, as it is a “sales and use” tax that is paid on materials and other inputs for products. As the governor has also pointed out, the sales tax in Louisiana in general is in disarray, with different “pennies” applying to different purchases, and many services taxed in other states not touched by Louisiana’s system.
For all the accuracy of the governor’s analysis, there’s an important political angle: We urge lawmakers to talk to old-timers about what happened in the 1990s, when state government was also reliant on “temporary” sales taxes that had to be renewed every two years.
It was a biennial political crisis. Forget what you learned in civics class about how a bill becomes law; the reality was that the sales tax renewals were bought with political bribes, in the form of state spending on lawmakers’ favored programs or projects in their districts.To avoid that, the task force recommendations ought to be adopted.
Even temporarily renewing the sales tax means a further burden on Louisiana families at the checkout counter and will cause needless controversies over future renewals down the road.