Louisiana sales tax rate changes Sunday, part of budget deal

Posted at 9:30 PM, Jun 30, 2018
and last updated 2018-06-30 22:30:57-04

BATON ROUGE, La. (AP) – Louisiana consumers will pay slightly less for their purchases starting Sunday when the state sales tax rate drops as nearly three dozen new laws take effect with the start of the latest budget year.
The state sales tax had been slated to decrease from the 5 percent rate temporarily enacted in 2016 to 4 percent, but lawmakers in their latest special session renewed 0.45 percent of the expiring tax to avert steep cuts to college campuses and government-financed programs.
With that legislative action, the sales tax rate is shrinking to 4.45 percent instead, a rate enacted for seven years. The decrease will affect nearly every person and business in the state, though it’s questionable how many will notice the modest change.
Renewal of part of the sales tax drew heated disagreement over three special sessions this year before lawmakers brokered the final deal a week ago. Conservative Republicans called the deal a tax hike, while Democratic Gov. John Bel Edwards called it a tax cut.
Few lawmakers seemed entirely happy with the tax renewal in the bill sponsored by Baton Rouge Republican Rep. Paula Davis. Democrats would have preferred using income taxes to close the budget gap, while many Republicans said they were unhappy with the idea of voting for a tax at all.
"I see a lot of bottom lips poking out, people not happy, so it must be a compromise," said Republican Sen. Dan Claitor of Baton Rouge. He called himself "proud of the end result."
House Democratic leader Robert Johnson of Marksville called the sales tax "an imperfect, but necessary instrument" to avoid damaging cuts to the TOPS college tuition program, food stamp aid and other government services.
Shreveport Republican Rep. Alan Seabaugh disagreed, saying Louisiana could pay for its priorities without passing new taxes, though he didn’t offer ideas for how he’d reshuffle money to make it work. He said in a radio interview: "We had enough money to fund everything."
Senators overwhelmingly voted 33-6 for the partial tax renewal, and the House backed it in a bipartisan 74-24 vote, supported by Republican House Speaker Taylor Barras but opposed by House GOP leader Lance Harris of Alexandria.
Several sales tax breaks for people and companies, particularly a sales tax break charged on business utilities, also are being scaled back as part of the budget compromise.
The small, downward adjustment in tax rate isn’t enough to dislodge Louisiana from its position on an undesirable list. Louisiana continues to have the highest average state and local sales tax rate in the nation, with an average sales tax of 9.47 percent, according to the latest data available from the nonpartisan, conservative Tax Foundation.
State sales tax still won’t be charged on food for home consumption, residential utilities and prescription drugs.
Few other law changes taking effect Sunday have drawn widespread attention. Many of the measures passed by lawmakers earlier this year involve adjustments to government retirement system statutes.
One new law ensures that pornographic films aren’t eligible for Louisiana’s film tax credit program. Supporters of the measure said the state Department of Economic Development already didn’t issue the tax credits to projects involving pornography. The legislation by Rep. Mark Abraham, a Lake Charles Republican, codifies that into law.