BATON ROUGE — Lawmakers in the Louisiana House are weighing whether to boost taxes on shoppers, smokers, drinkers, phone service and more as they look for ways to end the boom-and-bust cycles of the state budget.
After days of closed-door negotiations, the House on Thursday was scheduled to debate more than 30 tax proposals aimed at raising new cash for state government operations.
The short-term problems are acute: Louisiana has a budget gap estimated at around $900 million that needs to be closed by June 30. Public colleges, health care programs and social services are threatened with deep reductions if new dollars aren’t plugged into the hole.
Next year’s budget shortfall is even worse, estimated to top $2 billion.
Gov. John Bel Edwards is proposing to raise more than $420 million in taxes for this year’s budget, to combine with other short-term fixes and spending reductions across agencies. The Democratic governor is seeking even greater tax hikes for next year.
But Republicans, particularly in the House, are reticent about many of the proposals. And the Senate only can consider — or modify — tax measures that win passage from the House, making the action in the lower chamber of great significance to budget-balancing efforts.
The foundation of Edwards’ plan is a bill sponsored by Rep. Katrina Jackson, D-Monroe, that would raise Louisiana’s 4-cent state sales tax by another penny on every dollar spent. The proposal is seen as critical to the budget-balancing effort because it could kick in quickly and raise money immediately. If it began on April 1 as proposed, the tax hike would raise an estimated $220 million for this year’s budget and more than $900 million yearly.
Other measures sought by the governor would increase cigarette and alcohol taxes, charge a sales tax on car rentals, increase taxes on phone service and boost costs on business utilities. New taxes would be charged on online room rentals, like those booked with Airbnb, and tax breaks for companies that pay property taxes on their inventory would be scaled back.
Edwards also is proposing some long-term tax restructuring that could bump up the taxes owed by middle- and upper-income earners and change the way corporate taxes are charged. The administration says those ideas would put Louisiana on a stronger financial footing, allow tax revenue to grow with the economy and end giveaways that have the state paying more in tax breaks to business than it collects from them in taxes.
GOP lawmakers are pushing back against many of the ideas, saying they support efforts to restructure Louisiana’s tax system to make it more competitive and to treat people and businesses fairly. But they say state government is bloated and in need of restructuring as well, and they want any tax measures coupled with deeper cuts and reform proposals
A look at tax proposals up for debate
BATON ROUGE — Lawmakers in the Louisiana House will consider Thursday more than 30 tax proposals that could help balance this year’s budget and drum up more money long-term for the state treasury. Estimates were still being worked out on what the bills could raise. Here’s what is known about what some of the measures would do:
Increase Louisiana’s 4-cent sales tax by another penny on every dollar spent, starting April 1, without many of the exemptions allowed on the other four pennies of the tax. Revenue raised: $220 million for this year’s budget and $910 million annually. House Bill 62.
Rework a sales tax exemption for business utilities, requiring companies to pay the 4 percent tax, but with provisions to lower the rate if natural gas prices rise, starting April 1. Revenue raised: $60 million for this year’s budget and $240 million annually. House Bill 64.
Charge a state sales tax on hotel rooms booked through online travel companies like Expedia and short-term rental sites like Airbnb. Revenue raised: Uncertain. House Bill 59.
Provide a method for collecting state sales tax from online retailers. Revenue raised: Uncertain. House Bill 30.
Cap the amount a vendor collecting sales tax on behalf of Louisiana can receive as compensation for turning over the payment, starting April 1. Revenue raised: $2 million for this year’s budget and $8 million annually. House Bill 43.
Boost the cigarette tax from 86 cents per pack to $1.08, starting April 1. Revenue raised: $16 million for this year’s budget and $46 million annually. House Bill 14.
Increase the tax rates charged on liquor, wine and beer, starting April 1. Revenue raised: $9 million for this year’s budget and $28 million annually. House Bill 27.
Individual Income Taxes
Increase the state income tax for middle- and upper-income residents who itemize their tax deductions, by cutting the percentage of federal excess itemized deductions they can deduct. Revenue raised: $142 million annually. House Bill 33.
Eliminate the state tax deduction for federal income taxes in exchange for lower individual tax rates. Revenue raised: Uncertain. House Bills 31, 32 and 95.
Increase income taxes on people with a net income above $17,500 a year. Revenue raised: $324 million in the 2016-17 budget year and $259 million annually thereafter. House Bill 34.
Double the amount of a state tax credit for the working poor, called the Earned Income Tax Credit. Cost: $47 million a year. House Bill 5.
Make permanent across-the-board cuts on many tax break and business tax rebate programs. The reductions are due to expire on June 30, 2018. Revenue raised: Won’t affect the treasury until 2018. House Bills 22, 23 and 24.
Reduce the tax credit businesses can receive from the state for paying local property taxes on their inventory. Revenue raised: $290 million annually. House Bill 46.
Change what businesses can deduct from their income for tax purposes. Revenue raised: Uncertain. House Bill 55.
Reinstate a 3 percent state car rental tax that expired four years ago, starting April 1. Revenue raised: $800,000 for this year’s budget and $5 million for the state annually. House Bill 39.
Renew the state telecommunications tax. Revenue raised: No change. House Bill 72.