Minden Press-Herald

Oct 01st

Budget Plan: few surprises

522756 296134503798303 432179451 nFor state Rep. Gene Reynolds, D-Minden, there were few surprises in Gov. Bobby Jindal's budget plan released Thursday.

"He didn't fine tune a whole lot," Reynolds said of the Republican governor.

Jindal and his leader on the tax code revamp, Tim Barfield, proposed a hefty jump in the state's sales tax rate and $1 billion in new taxes charged on services to help offset the cost of his push to eliminate Louisiana's income taxes.

Jindal wants to boost state sales taxes from four percent to 5.88 percent, increase cigarette taxes from 36 cents per pack to $1.41 and assess sales taxes on a wide range of services not currently taxed.
"We think the next big step to bringing our kids back and growing the state economy is getting rid of the income taxes," Jindal told the House and Senate tax-writing committees during a legislative hearing this week.

The increase would boost Louisiana's combined local and state sales tax rate average to 10.75 percent, the highest in the country.

State sales taxes would be charged on a new list of services not currently taxed, like haircuts, landscaping, cable TV, pet grooming, tanning salon visits, agricultural services and data services.
"Any service that makes less than $10,000 in the course of a year would be exempt from the tax," Reynolds said. "But the problem we're going to have with that is that we may have to have a whole new agency formed to keep up with that."

Jindal also wants to remove an unspecified list of tax breaks, shrink the number of tax exemptions for the oil and gas industry, and limit the state's economic development incentives for the film industry.
In exchange, the plan would do away with the state's individual income tax and the state's corporate income and franchise taxes, which bring in about $3 billion a year.

Exempt would be health care, education, construction, real estate, financial services, advertising purchases, legal services, oil and gas services and funerals.

"However, will that make up for the revenue lost from the income tax and corporate franchise tax?" Reynolds asked. "I don't know that they (Jindal and Barfield) know that yet.

"In the proposal are 130 tax exemptions that are connected to the income tax and the corporate tax," Reynolds continued. "For instance, the tax exemption that you have for the state income tax that you can claim on your federal? That goes away."

There are more than 200 total tax exemptions in the plan, Reynolds said.

"There will be tremendous push-backs on this from various groups that will have these exemptions taken away from them," Reynolds predicted.

There would be rebate programs for low-income households and for retirees with less than $60,000 adjusted gross income to help offset the increased sales tax costs.

Jindal wants the "tax code rewrite" to keep the state's overall tax collections at the same amount that would have been received without the changes — what the governor calls "revenue neutral."
"That was not discussed when I was there (in February)," Reynolds said. "That was all new."

Lawmakers will consider the ideas in the legislative session that begins April 8. Initial reviews from committee members were skeptical, with Republicans and Democrats questioning the need for the overhaul, rather than smaller tweaks to the tax code.

"We are not presenting to you today a plan etched in stone," the governor told them. "There are a lot of different ways to get to our end point, which is a better tax code for the people of Louisiana."






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