A lot of Louisiana Legislators were surprised last year to learn that in their last-minute scuffle to fix the state budget, they had jettisoned sales tax holidays.
It’s a situation they hope to fix in the legislative session that begins in three weeks on April 8 — at least for guns and hunting supplies — in what is the first bill that chips away at the bargain that kept the state from careening off the fiscal cliff.
Last year, legislators had deadlocked over how to fill a huge deficit expected when the fifth penny of the 5-cent state sales tax expired. If the penny expired, state government wouldn’t have enough revenues to pay the bills absent draconian cuts in services.
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.
Friday, Aug. 3, was supposed to be the start of a tax-free weekend for Louisiana consumers colloquially dubbed the “back-to-school” state sale…
Unnoticed until after the bill became law in July was that among the 100 or so suspended exemptions were the three long weekends when consumers wouldn’t have to pay state sales taxes on many of their purchases.
The Hurricane Preparedness holiday forgave most of the sales taxes on supplies like batteries, storm shutters, tarpaulins and other supplies, at a cost to the state of an estimated $34,000.
The Annual Louisiana Sales Tax Holiday covers a lot of goods but was mostly used by consumers to buy school supplies. It cost the state about $1.2 million.
And the Second Amendment Sales Tax Holiday exempted state sales taxes on consumer purchases of firearms, ammunition and hunting supplies. The state was expected to lose an estimated $404,000.
Not a lot of money, but 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.
Months after Baton Rouge lawmakers eliminated or parsed back Louisiana's so-called state tax holidays, a conservative-leaning think-tank relea…
State Rep. Jay Morris, R-Monroe, is sponsoring House Bill 60, which would bring back the guns holiday. No bills have yet been filed to bring back the other two tax holidays.
“The Second Amendment is important to our citizenry. It (HB60) sends the right message,” Morris said.
Cynics will question the optics of Louisiana legislators favoring guns over school supplies.
But there’s more than Second Amendment boosterism at play.
Consider the case of Columbia, a northeast Louisiana town founded in 1827 as an Ouachita River steamboat port for cotton. Like many of Louisiana’s small towns in rural areas, Columbia’s population has been dropping every year since the 1970s. Now with about 384 residents — 26 percent of whom live in poverty — the town has only a few businesses and fewer sources of revenues to pay for local government services.
In 2018, Columbia collected $55,318 in property taxes, $189,163 in sales taxes, $159,325 from drinking water and $62,929 in fines as part of the $465,289 in total revenues to run the town. That’s about a third less than the $610,666 LSU President F. King Alexander makes to support his family of four.
Columbia is the hometown to a pantheon of noted Louisiana politicians: John McKeithen, who was governor in the 1960s; his son Fox, who was secretary of state for five terms; former Louisiana Supreme Court Justice Chet Traylor; former Attorney General Buddy Caldwell; and state Sen. Neil Riser.
It's Republican Sen. Riser who is pushing the legislation, not so much as pro-gun measure, though he is very pro-gun, but as an economic development idea. He acknowledges that while the gun holiday results in little revenue, the sales that are made are vital to his hometown’s remaining retailers who operate on narrow profit margins.
Columbia is the jumping off point for many a hunting trip into the 51,000-acre Boeuf Wildlife Management Area. Owned by the Louisiana Department of Wildlife and Fisheries, Boeuf is known for ducks, deer and wild pigs. For local merchants, the sales tax holiday accounted for a significant boost in hunters visiting Columbia and making purchases, not all of which are guns.
Sales taxes have multiplier of seven, Riser said, meaning that every dollar spent in one establishment is used to pay wages or buy more stuff at some other local business. “It’s a huge impact for us,” he said.
“It may not mean much in places like Baton Rouge,” said Riser, who will handle HB60 in the Senate, “but for the local Chevron and Quick Mart, it’s an economic driver.”
Louisiana’s local and parish taxing authorities — whether they like it or not — are going to have to forfeit revenue on the sales of guns and …
He recalled when the Boeuf was closed for three days because of flooding and those two businesses took 90 days to recover from the loss of income. “That’s the kind of thin margins we operate on,” he said.
Some legislators want to amend the gun bill to resurrect the other two sales tax holidays, said state Rep. Jack McFarland, R-Jonesboro, who was part of the team who went to the governor’s office to negotiate the last-minute deal.
“There’s been a desire to go back and look at the sales tax holidays,” McFarland said. “We’re not talking about a whole lot of money in the context of our budget as a whole.”