Counting the things that the recently adjourned Louisiana Legislature failed to do can be a long list, but even where the financial crisis over the last 2½ years forced changes, lawmakers were reluctant to take on the political powers-that-be.
An example: sales tax collectors in local governments. We need to cut the paperwork out of collections and end the political payrolls of local collection offices in parishes.
Louisiana’s long-confused system of sales taxes, upon which governments have become increasingly reliant, is considered a mess by national and Louisiana experts. The state may offer tax breaks for certain transactions, and local governments may or may not also give that same benefit.
Not least of the problems is the red tape involved for businesses. Remember that businesses don’t pay taxes so much as they collect taxes, then pass the costs on to customers. In the case of the Louisiana sales taxes, the businesses pay state collectors and parish collectors, a pre-computer artifact of government. It’s costly, and the burden is passed on to the consumer.
“In other states, you pay just to the state, and the state funnels it down” to local governments, said Greg Albrecht, the Legislature’s chief economist. That makes collections cheaper most everywhere, but not in Louisiana.
Businesses have long decried the fact that they can face separate audits from differing tax collectors, while most states have only a single audit agency.
Among the more obscure state bodies, a 2017 Sales Tax Streamlining and Modernization Commission pushed for several measures favored by tax experts to simplify the tax code. The powerful Louisiana Sheriffs’ Association, however, and other local government entities fought a push to make them surrender their role of collecting taxes on the local level.
The sheriffs and other local governments are fighting to keep patronage jobs at their disposal, a precious political asset.
What is going to make Louisiana change? Perhaps it will be the new authority, by virtue of a U.S. Supreme Court decision, to collect sales taxes on internet purchases.
The Legislature this year recognized that fact, and modestly improved Louisiana’s system of sales taxes. As of July 1, the beginning of the new fiscal year, all of the state sales tax, 4.45 percent, is collected on all purchases. Of course, this is Louisiana: petrochemical manufacturers, another powerful lobbying group, managed to block a clean sales tax; business utilities are only taxed at 2 percent.
Louisiana passed a state law before the Supreme Court ruling that creates a hybrid, with local collections — and their patronage jobs — undisturbed for Louisiana businesses and a statewide system for the online retailers outside the state.
We’ll see how that works out, but ultimately there are two issues. One is whether the state’s system passes muster with courts that demand a simple and understandable protocol for out-of-state retailers who don’t care about Louisiana’s political fiefdoms. Another is whether we’ll continue to fight against centralized collection, a more pro-business and pro-consumer model.
So far, legislators have largely supported the interests of local patronage over consumers and businesses.