HomeTop StoriesLouisiana lawmakers don't want to raise sales taxes, putting the Landry plan...

Louisiana lawmakers don’t want to raise sales taxes, putting the Landry plan in jeopardy

Louisiana Governor Jeff Landry, center, greets Rep. Polly Thomas, R-Metairie, left, with Rep. Mike Johnson, R-Pineville, right, as he enters the Louisiana House of Representatives on the opening day of a legislative special session, Wednesday, Nov. 6, 2024, at the Louisiana State Capitol in Baton Rouge. (Hilary Scheinuk/The Advocate, Pool)

A central part of Gov. Jeff Landry’s plan to overhaul the state’s tax laws is struggling to get the votes needed to pass, and some lawmakers have said the bill that would expand the sales tax to services and labor in its current form is dead.

House Bill 9sponsored by Rep. Neil Riser, R-Columbia, was sidelined for the second day in a row Thursday because he chose not to bring it up for a vote in the House of Representatives. The measure would expand the state’s sales tax to cover a list of more than 40 services, including lawn care, massage therapy and various home repair offerings.

To introduce similar legislation sales tax on online streaming subscriptions and other digital services evacuated the House of Representatives on Wednesday.

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Riser, who represents a rural area of ​​northeastern Louisiana, expressed the precarious nature of the situation in an interview in the House of Representatives as lawmakers adjourned for the day, saying there is nothing in the bill that can be changed to gain support from one legislator without the support of another.

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“It’s like a ripple in time,” Riser said.

His bill is part of a package Governor Landry proposed to offer lower income taxes for individuals and businesses in exchange for more sales taxes and fewer tax credits. Supporters of the plan argue the measures would bring more business and jobs to the state.

For a special session scheduled to end at 6:00 PM on November 25, the current pace of legislation does not bode well for the original package of bills.

Senate President Cameron Henry, R-Metairie, said in an interview that Riser’s proposal has been a particular sticking point for lawmakers.

“The services have been very difficult throughout this process because if you keep everyone in, that’s one thing,” Henry said. “But once you started splitting up and picking winners and losers, it became very difficult to justify.”

Tax laws in Louisiana require a two-thirds majority in each legislative chamber to pass.

From the beginning, a significant number of lawmakers from every political party have expressed reluctance about taxing services and labor. Some fear the impact will fall hardest on lower-income residents, and others worry about the costs and logistical burdens on small businesses and sole proprietors.

Rep. Mike Bayham, R-Chalmette. (Allison Allop)

Rep. Mike Bayham, R-Chalmette, said Riser’s bill would leave many small business owners no choice but to hire accountants who would likely charge a premium because demand would “go through the roof.”

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“Small businesses will rush into accounting firms,” Bayham said. “And besides, whose services are exempt from tax under the bill? The accountants.”

He said he hopes the governor will realize that parts of his plan could end up favoring large companies over smaller ones.

“We can’t be corporatists,” Bayham said. “We need to help our small businesses, along with our big businesses. Do not prefer one over the other.”

Sen. Gerald Boudreaux of Lafayette, chairman of his chamber’s Democratic Caucus, said the sheer number of new services to be taxed would create collection enforcement problems.

“There are so many who have never been taxed before,” Boudreaux said. “… How are we going to regulate that, and how is that going to happen?”

New doubts began to mount Wednesday during a hearing on Riser’s bill in the House Ways & Means Committee, when several insurance industry executives testified that the proposal would force property insurance premiums to increase.

Rodney Braxton, a lobbyist for the trade group Insurance Council of Louisiana, said lawmakers’ rates would undoubtedly increase if labor on home repairs were taxed.

The bill would exempt all property services and repairs resulting from a declared disaster, and any services considered “capital improvements” that increase the value of a property. However, insurance executives told the committee that these exemptions could actually create uncertainty in the insurance market, ultimately resulting in higher costs for policyholders.

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If passed, Riser’s bill would generate an estimated $1.9 billion in state revenue over the next five years. analysis released Thursday evening by the nonpartisan Legislative Fiscal Office. Without that potential revenue, lawmakers would likely have to consider raising sales taxes on other things.

The House did succeed in passing related legislation that would set the actual sales tax rate at 4.4%, leaving 0.05% of a House Bill 10sponsored by Rep. Mark Wright, R-Covington, cleared the House by a vote of 71 to 23 — just one vote more than the two-thirds needed for tax measures.

Wright’s bill underwent several amendments addressing tax exemptions for diapers, church books, and other special interests. The heads next to the Senate Committee on Taxation and Fiscal Affairs.

Henry said he would prefer not to adjust the flat tax bills, which set rates of 3% for personal income and 3.5% for businesses.

“The implementation of this may be delayed to see how much revenue comes into the other accounts…,” Henry said, specifically mentioning the digital services tax bill. ‘Maybe we don’t have to talk about it now. We could address it in the future.”

Such discussions have been put on hold until lawmakers meet again on Monday.

Julie O’Donoghue contributed to this report.

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