Tax & Accounting Blog

Louisiana Governor to Propose Income Tax Elimination and Sales Tax Increase

Aumentum, Indirect Tax, ONESOURCE, Sales and Use Tax, Transaction Tax March 20, 2013

Louisiana Governor Bobby Jindal is preparing a proposal for the state Legislature which would overhaul the state’s tax system. The Governor and his constituents have stated that the plan includes eliminating the state income tax, increasing the state sales tax at least 1.78%, possibly increasing the tobacco tax, widening the list of services taxed, and eliminating some the state’s current 400+ exemptions. Many details of the proposal have been withheld until it is complete and the Legislature meets in April, but the Governor has made it clear he hopes these changes will remain “revenue neutral” for the state.

One of the Governor’s biggest kinks is the opposition from the state’s retirees. With the change in tax system, retirees who have already paid taxes on the bulk of their income and planned to pay less income taxes in their golden years, will now be burdened with an increase in net taxes payable because of the sales tax increase. State Rep. Rep. Joel Robideaux, who as chairman of the House Ways and Means committee and will likely sponsor the legislation once it’s filed, acknowledges that “The practical truth is that it’s not going to pass if every retiree in the state of Louisiana is opposed to the bill. So there is going to be a fix for the retirees.” However, no specifics of the potential “fix(es)” were disclosed.