Reinstating three sales tax holidays on three different weekends took a first legislative step Monday when a Louisiana House committee advanced one bill to do so, then rejected a measure that would have consolidated all three holidays on a single three-day weekend.
The three sales tax holidays – one for guns, one for hurricane provisions, and a general one often used to buy school supplies – had been suspended for seven years along with about 100 other exemptions to help balance the budget as part of the bargain in June that ended the state’s string of deficits.
House Ways & Means Committee amended, then approved, House Bill 60 to include all three sales tax holidays. HB60, by state Rep. Jay Morris, R-Monroe, initially targeted only the Second Amendment holiday. But Morris and Senate sponsor, Sen. Neil Riser, R-Columbia, said they were always open to adding the other holidays as well. The legislation now heads to the full House for consideration.
A lot of Louisiana Legislators were surprised last year to learn that in their last-minute scuffle to fix the state budget, they had jettisone…
The panel then set aside four other bills that aimed at bringing back one or more of the holidays. The committee then debated and rejected House Bill 450, another measure bringing back sales tax holidays.
A number of bills have been filed that chip away at the June 2018 bargain that overcame an impasse in the Louisiana House over how to deal with a shortfall in revenues expected when the fifth penny of the 5-cent state sales tax expired. One measure, House Bill 584, that would do away with the agreement altogether.
Republican House members wanted to retain 40 percent of the expiring penny. Democrats, Gov. John Bel Edwards and most of the state Senate resolved to keep 50 percent or a half of the fifth penny — a difference of about $86 million.
The compromise was a sales tax rate at 4.45 percent of every dollar. But to cover that amount, supporters of the compromise assiduously fought efforts to include exemptions that had been suspended until 2025 — arguing that returning this exemption or that one would upset the precise calculations that made the deal work.
Almost from the minute last June when the Louisiana Legislature approved raising the state sales tax to 4.45 cents on every dollar spent — it …
Many lawmakers didn’t realize until a few weeks later that among the 100 or so suspended exemptions were the three weekends when consumers wouldn’t have to pay state sales taxes on many of their purchases.
The Hurricane Preparedness holiday on the last Saturday and Sunday in May forgave most of the sales taxes on supplies like batteries, storm shutters, tarpaulins and other supplies on transactions of up to $1,500. The holiday ran for two days and cost the state an estimated $34,000, according to the state Department of Revenue.
The two-day Annual Louisiana Sales Tax Holiday in August covers a lot of goods but limited transactions to $2,500 to avoid using it on buying licensed vehicles. The holiday was mostly used by consumers to buy school supplies. It cost the state about $1.2 million.
And the Second Amendment Sales Tax Holiday ran for three days in September and exempted state sales taxes on consumer purchases of firearms, ammunition and hunting supplies. The holiday had no limits on transactions. The state was expected to lose an estimated $404,000.
The Tax Foundation in Washington, D.C. notes research shows that “sales tax holidays do not promote economic growth or significantly increase consumer purchases,” which are the arguments for the holidays in the 17 states where they are held. At best, consumers just hold off buying stuff until the holidays roll around.
HB450, by Republican Central Rep. Barry Ivey aimed at putting all three sales tax holidays on a single day and consolidate the differing aspects for each of the holidays.
For instance, only the Second Amendment holiday exempts both local and state sales taxes, which depending on the jurisdiction could be about 9.5 cents for every dollar spent. The other two holidays apply only to the 4.45 percent state sales tax.
HB450 would have forgiven state and local sales taxes for most consumer purchases during a single three-day holiday and set the $2,500 cap on all transactions. The measure would have raised the cost to the state from about $4.9 million in lost revenues to about $6.4 million.
State Rep. Julie Stokes, R-Kenner, supported the concept of making the holidays uniform and run on the same day. National rating services had penalized Louisiana in their analysis of the state’s tax system because the holidays use differing standards for each event, which causes confusion and requires retailers to reset their cash registers to meet the different mandates.
Acadiana Rep. Phillip R. DeVillier, R-Eunice, said he was concerned about taking away a source of revenues from already strapped local governments.
The committee voted 7 to 11 against reporting HB450 to the full House for further consideration.
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