BATON ROUGE – Louisiana’s tax system would be simplified with lower rates, fewer exemptions and a broader revenue base under recommendations from the task force charged with developing a more stable funding model for state government.

The Task Force on Structural Changes in Budget and Tax Policy presented its final recommendations to the state legislature on Tuesday. The task force emphasizes that an effective tax structure should be fair, simple, and stable in the long term.

"Louisiana’s tax system should be easy to comply with and should be competitive with other states,” said task force co-chair and Secretary of Revenue Kimberly Lewis Robinson. “And there should be minimal exceptions, so we are advising lawmakers to address a multitude of exemptions, deductions and credits that have multiplied over the years.”

The task force’s recommendations focus on the budget, as well as sales, individual income, corporate income and franchise, and property taxes.

“We recommend implementing this full package as a comprehensive solution to stabilize the state’s finances,” said task force co-chair Jim Richardson, who serves also as chair of the state Revenue Estimating Conference. “A piecemeal approach will fall short of that goal.”

Budget

Recommendations include implementing and adhering to improved revenue forecasting, particularly with regard to the MFP, Medicaid and TOPS; and continuing the ongoing review of state contracts to identify opportunities for consolidation, renegotiation or elimination.

Sales Tax

Recommendations include reducing the state sales tax rate to no more than 4 percent; expanding the state sales tax base to include non-residential utilities and certain services currently taxed in Texas and other states; and retaining eliminations of exemptions made by the Legislature earlier this year.

Individual Income

The task force recommends two options for individual income tax changes.

One, a constitutional amendment repealing the state deduction for federal income taxes paid, would expand the tax base, narrow the brackets and  lower all individual income tax rates by 25 percent:

• 1.5 percent on the first $25,000 for couples ($12,500 single);
• 3 percent on $25,001 through $50,000; and
• 4.5 percent above $50,00

The second option, a statutory change removing the excess itemized deduction, would use the new three-bracket structure, but would leave the rates at 2%, 4% and 6%.

Various exemptions would be eliminated or allowed to expire.

Corporate Income

Corporate income tax recommendations include support for eliminating the state corporate income tax deduction for federal income tax, a constitutional amendment (Amendment 3 on the Nov. 8, 2016, election ballot). If passed, the amendment would also trigger a simpler, flat corporate income tax rate of 6.5 percent that would be more stable than the current graduated rate which ranges from 4 to 8 percent.

Property Tax

Recommendations include amending the state constitution to allow for the gradual, ten-year phase out of locally assessed ad valorem taxes on inventory.

The task force also recommends elimination over a five-year period of the state income and franchise tax credit for ad valorem taxes paid on inventory.

 

The full set of recommendations is available at www.revenue.louisiana.gov/taskforce.

 

BATON ROUGE - A task force reviewing state tax policy is backing a proposed constitutional amendment that would alter Louisiana’s corporate tax structure.

The Nov. 8 ballot measure is Constitutional Amendment No. 3, which would eliminate a major corporate income tax deduction for federal taxes paid. Its passage would trigger implementation of a new law establishing a lower, flat corporate income tax rate. The current graduated state corporate income tax rate ranges from 4 to 8 percent. It would be replaced by a 6.5 percent across-the-board rate.

“The constitutional amendment, along with task force recommendations that will be released next week, will move Louisiana toward a more fair, simple and broad-based tax structure,” said Secretary of Revenue Kimberly Robinson, co-chair of the Task Force on Structural Changes in Budget and Tax Policy.

 

The proposed constitutional change would also decouple Louisiana’s tax base from federal tax changes, creating a more stable Louisiana tax structure, Robinson said.

 

The task force decided Wednesday to make its position on the ballot proposition known since early voting is underway.

 

 

BATON ROUGE – Hunters get a discount on the state sales tax when they shop for firearms and other hunting supplies during the 2016 Second Amendment Weekend Sales Tax Holiday Friday, September 2 through Sunday, September 4.   The legislature created the sales tax holiday in 2009 to exempt eligible purchases of guns, ammunition and hunting supplies from all state and local sales taxes. However, as amended during the 2016 First Extraordinary Session of the Louisiana Legislature, the state sales tax exemption for 2016 and 2017 is now two percent, meaning eligible purchases are subject to only three percent state sales tax instead of the full five percent. Eligible purchases remain fully exempt from all local sales taxes.   The sales tax holiday applies to a wide range of hunting supplies including guns, ammunition, hunting apparel and archery equipment. Read the full list of eligible items, exceptions and special provisions at www.revenue.louisiana.gov/secondamendment.