In something akin to a secret Santa, Louisiana announced with little fanfare that consumers making purchases on Friday and Saturday won’t have to pay the state’s 4.45% sales taxes.
That’s on purchases up to $2,500 per store, including layaways and online buying. The sales tax holiday doesn't cover vehicle purchases or meals. And local jurisdictions will still charge local sales taxes.
The bill creating the one-time tax break for consumers whizzed through two committees and both chambers in a total of 11 minutes 14 seconds of debate, including votes on five changes to the legislation’s wording. Nobody voted against House Bill 26 and Gov. John Bel Edwards signed it swiftly. The Department of Revenue issued the regulations on how the holiday would operate on Monday.
House Speaker Clay Schexnayder sponsored HB26 but never spoke on its behalf.
State Rep. Malinda White, D-Bogalusa, handled the legislation in the House, saying the measure would help residents and businesses recovering from hurricanes Laura and Delta and coping with the coronavirus pandemic. “This is a good bill for our people,” said Denham Springs Republican Sen. Rogers Pope, who handled the legislation in the state Senate.
“It came to me from everything happening with the economy due to COVID and also the hurricanes. Many constituents reached out to me about a little help for local/small businesses,” Schexnayder said Wednesday in a text. Though the bill that became Act 16 was drafted on the instructions of the Gonzalez Republican, nearly the entire Legislature signed on as co-sponsors.
Kiplinger, a Washington, D.C. based publisher on taxes, calculated that buying a $1,000 television Friday or Saturday will save a Louisiana consumer $44.50 in sales taxes. Local sales taxes, which vary depending on jurisdiction, will still be charged.
The tax holiday legislation came as something of a surprise to the lobbyists representing retailers and small businesses at the state Legislature.
“It wasn’t something we pushed,” said Dawn Starns, state director for the National Federation of Independent Business Louisiana. “But we were delighted. …People love not paying taxes any chance they get. This gives a reason to go out shopping.”
Retail sales fell off the cliff when businesses had to close and people were ordered to stay at home in hopes of stanching the fast growth of COVID-19, Starns said a NFIB analysis showed. Retails sales rebounded and have now surpassed pre-pandemic levels.
But she noted that traditionally the last three months of the year is when most retailers make the bulk of their money. Retailers this Christmas season are hoping to make up some of the ground lost from earlier this year and are doing so as another serious wave is fast increasing the number of COVID-19 cases in Louisiana.
The sales tax holiday is in addition to sales events next weekend, Nov. 27-Nov. 30 – Black Friday, Small Business Saturday and Cyber Monday – during which private retailers reduce prices, meaning two consecutive weekends with special events hoping to entice consumers to spend.
Gene Satern, senior general manager for the Mall of Louisiana, said the Baton Rouge shopping center is busy ramping up for Christmas. Any extra sales that come as a result of the sales tax holiday “are icing on the cake.”
So far, Mall of Louisiana stores aren’t doing anything special for the sales tax holiday and the center will have normal hours this weekend, Satern said.
Frank Quinn, general manager of The Outlet Collection at Riverwalk in New Orleans, said he’s not forecasting any increased sales this weekend at the shopping mall as a result of the sales tax holiday. Normally, about half of the shoppers at the outlet mall are tourists and those people aren’t aware of the sales tax holiday, he said.
The holiday is expected to keep about $4.5 million from being delivered to the state treasury this weekend, according to the Legislative Fiscal Office.
Louisiana once had three sales tax holidays: an annual one, usually in the weeks before school starts; one for Second Amendment that occurred prior to hunting season; and one for hurricane preparedness at the start of hurricane season. Together, the three cost the state about $1.5 million in unrealized sales tax revenues, the Revenue department reported for 2018.
The Legislature and the governor suspended the sales tax holidays as part of a deal to help balance the budget two years ago.
Seventeen states are having sales tax holidays this year
Business writer Tim Boone contributed to this report
Sales tax holiday specifics
Eligible transactions include:
- Buying and accepting delivery of tangible personal property
- Placing tangible personal property on layaway
- Making final payment on tangible personal property previously placed on layaway
The sales tax holiday does not apply to:
- Business or commercial purchases of tangible personal property
- Prepared meals
- Rentals or leases of tangible personal property
- Sales of taxable services
- Vehicles subject to license and title
The sales tax holiday exempts eligible purchases from the 4.45% state sales tax only. Local sales and use taxes apply to all purchases.
Source: Department of Revenue
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