Thursday, March 14, 2013

Gov. Jindal Says 5.88% Is Magic Sales Tax Number

Thursday, Governor Jindal disclosed details of his plan to eliminate the state income tax and replace it with a higher state sales tax rate. The current state sales tax rate is 4% and Governor Jindal is proposing to increase that rate to 5.88%.

In addition to the state sales tax, municipalities and parishes also levy additional sales taxes. The local/parish sales tax option ranges from an additional 3% to 7%.
Locally, Jefferson Parish adds 4.75% to the state sales tax while Orleans Parish adds 5% and Plaquemines adds 4%. Including the proposed state sales tax increase, the new rates would be 10.63% for Jefferson, 10.88% for Orleans and 9.88% for Plaquemines. All three parishes charge a lower local rate for Food, which is exempt from the state sales tax as is Utilities and Prescription Drugs.

In addition to raising the state sales tax rate, Governor Jindal is proposing to eliminate about 200 current exemptions, include rebates for low-income residents and retirees, and raise the cigarette tax by $1.05 per pack.
While not disclosing complete details on the entire package, which the Governor described as not “etched in stone”, the plan calls for a sales tax on some previously untaxed services including haircuts, movie and theater tickets, and landscaping to name a few.

“I know this is not the beginning or the ending of the conversation,” Governor Jindal said to lawmakers.
House Democratic leader, and gubernatorial candidate, John Bel Edwards of Amite was critical of the plan.

In a written statement, Edwards said, “It will raise taxes on most Louisiana families, Louisiana workers and Louisiana small businesses in order to give tax breaks to out-of-state corporations and the wealthy. Louisiana retailers will be especially hurt.”
If approved by the state legislature, the plan would go into effect on January 1st, 2014.   

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