Inartful wording at a forum earlier this month left the impression that Congressman Ralph Abraham, the leading Republican candidate for governor, told local officials what they wanted to hear – they should keep authority to collect sales taxes – then told the business community what they wanted to hear – that sales tax collections should be centralized.
But Abraham was clear on Friday.
“The truth is that a centralized tax system in Louisiana is inevitable because of the Supreme Court ruling,” said Abraham, R-Alto. “To be clear on my position, our current system has put Louisiana at a competitive disadvantage. At the same time, our sheriffs’ budgets are reliant on this revenue. While we work towards a centralized system, we have to make sure our sheriffs have a seat at the table so public safety is not put at risk.”
Louisiana is one of three states where local jurisdictions – about 370 of them, each with a different tax rate and different rules – have the authority to levy and collect their own sales taxes from brick and mortar establishments in their parish. School boards, municipal governments, law enforcement, police juries and other local taxing authorities set their own rates, with voter approval. That’s why different parishes have different tax rates. Each parish can decide how to collect the taxes for their local jurisdictions.
The business community has long argued a centralized system would be simpler than submitting paperwork to and being audited by each jurisdiction. But municipal and parish officials have been wary about giving the state more authority over local money. Sales taxes account for 40 percent to 60 percent, depending on the jurisdiction, of the revenues needed to pay for services, like maintaining roads. If the local money ended up in state coffers, then the Legislature could decide when and where it is spent.
The issue percolated up again after the U.S. Supreme Court’s June 2018 decision in Wayfair v. South Dakota gave states the ability to collect sales taxes from website sellers in different states. The 5-4 opinion suggested that states wanting to collect taxes on sales over the internet needed to adhere to several collection and remittance standards to avoid being too burdensome for out-of-state vendors. One of those recommendations was to use a centralized collection system.
The Louisiana Sales and Use Tax Commission for Remote Sellers earlier this year came up with a system that would use computer software to calculate sales taxes, based on the zip code of where the purchase is sent, then remit the proceeds to the various state and local authorities. But that’s only for internet sales. The discussion has led to renewed efforts to consolidate collections for sales in brick and mortar stores, too.
MONROE — Gov. John Bel Edwards and Congressman Ralph Abraham, two of the three major candidates for governor, squared off Thursday in two foru…
Democratic Gov. John Bel Edwards sided with local authorities earlier this month when he told sheriffs he had ordered state Revenue Secretary Kimberly Robinson draft legislation ensuring local jurisdictions retain their ability to collect their own sales taxes.
“That’s terribly important for y’all to leave this collection at the local level,” Edwards said Aug. 1 at a Louisiana Sheriffs’ Association forum in Baton Rouge. “You all are in the best position to do it, quite frankly.”
He reiterated that stance later in the day before a Louisiana Municipal Association forum in Monroe.
Republican Baton Rouge millionaire Eddie Rispone, Edwards other Republican opponent but who skipped both meetings, took an alternative position.
“Louisiana should have a fair and uniform centralized sales tax system. We know it can be more efficient, but we have to make sure it is effective as well,” Rispone emailed in response to a question. “That means working together with local governments and stakeholders to implement a system that they can be confident in and beneficial to all parties.”
Abraham told the sheriffs on Aug.1: “I know we’re only one of two or three states that collect our sales taxes like they are now, but actually it works. …You better be very careful because centralized means bureaucracy. It means stacks of pages and stuff you got to filter through to get the job done.”
In an issues questionnaire developed by Council for a Better Louisiana and released earlier this week, Abraham wrote: “We must move to a more centralized system. This change is also important to ensure that Louisiana and local governments are able to collect revenue from the growing number of online transactions.”
CABL, along with Public Affairs Research Council of Louisiana, or PAR another government policy think tank, joined with powerful Louisiana Association of Business & Industry and the state chapter of the National Federation of Independent Business have long pushed for centralized sales tax collections.