Home » House backs alcohol tax; Edwards objects to higher sales tax

House backs alcohol tax; Edwards objects to higher sales tax

by Minden Press-Herald

BATON ROUGE — The Louisiana House reversed course Sunday and agreed to raise alcohol taxes to help bail out the state budget, edging closer to filling a massive shortfall but still short enough money to avoid steep reductions to public colleges and health care services.

Efforts by House Republicans to balance the rest of the budget with a sales tax higher than the 1 percent increase already backed by the House and Senate ran into opposition, meanwhile, from Gov. John Bel Edwards. The Democratic governor said he wouldn’t support a larger sales tax on consumers, without more “shared sacrifice” from businesses.

The continued tax debate came in the final days of a special legislative session that must end Wednesday, as lawmakers in both the House and Senate worked into Sunday evening trying to reach a final mix of budget cuts and taxes.

Edwards called the 25-day special session to close gaps in Louisiana’s budget estimated to reach $900 million this year and to top $2 billion in the fiscal year that begins July 1.

Lawmakers have agreed to patchwork financing and spending cuts. But they’ve not agreed on enough taxes to fill the remaining holes, leaving colleges and health services at risk of steep slashing. House Republicans have bottled up many tax changes sought by Edwards, leaving senators — who are more open to taxes — stymied because most tax bills must begin in the House.

Lawmakers remain $150 million to more than $200 million short of balancing this year’s budget.

But there was some movement Sunday in the House.

The alcohol tax hike fell short last week of the 70 votes needed. But after two days of closed-door negotiations, several lawmakers in the House changed their minds, and the bill advanced to the Senate with a 76-25 vote.

“The House just did a small, but significant thing in passing the alcohol tax, which I consider a no-brainer,” Edwards said after the vote.

Supporters said the taxes haven’t been raised in decades. Rep. Walt Leger, D-New Orleans, said the tax hike would boost the cost of a can of beer by “three-quarters of a penny.”

The bill by Rep. Kenny Cox, D-Natchitoches, would raise an estimated $4 million for this year’s budget and $19 million annually.

Opponents said the increased rates could put Louisiana out of line with neighboring states. Rep. Kirk Talbot, R-River Ridge, said people who live near the state line may go to those other states to buy alcohol.

Negotiations continued behind the scenes on sales taxes.

Louisiana charges a 4 percent sales tax rate on purchases, or 4 cents on each dollar paid. Both the House and Senate have supported a 1 percent increase to the state rate starting April 1, a tax hike backed by Edwards.

Some Republicans in the House are suggesting a temporary increase that could go even higher, somewhere below 2 percent, over anywhere from two to five years, until lawmakers take a larger stab at tax reform.

“It’s still a viable option at this point,” said House Speaker Taylor Barras, R-New Iberia.

Sales taxes raise large amounts of money quickly. A higher sales tax is attractive to Republicans because it doesn’t face opposition from the state’s largest business lobbying groups. But Democrats say the tax hike would heavily hit the poor.

“It’s the wrong thing to do,” Edwards said.

The governor said he objects to the idea unless it’s coupled with other tax proposals he’s offered that would boost the taxes paid by businesses.

“I believe we need shared sacrifice,” Edwards said.

Supporters of the higher sales tax say it would fall evenly between individuals and businesses, but opponents say companies can pass along tax increases to their customers or use other tax breaks to offset them.

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