(The Center Square) – Leaders of the Louisiana Legislature released a letter to Louisiana taxpayers Friday announcing they will push to “fundamentally change our tax structure.”
Commissioner of Administration Jay Dardenne, who represents Democratic Gov. John Bel Edwards, said he was happy to work with the Republican-majority Legislature on a tax overhaul as long as the state continues to collect about the same amount of money.
“The focus of our tax reform efforts will be stability, simplicity and predictability,” the letter read.
The top two elected leaders in the state House and Senate, as well as the chairmen of the two committees in each chamber that handle state finances, signed the letter.
Proposals that will be considered during the legislative session that begins April 12 include:
• Centralizing state and local sales tax collection;
• Eliminating the state’s deduction for federal income taxes, which would require a state constitutional amendment, while reducing individual and corporate income tax rates;
• Reducing and simplifying the corporate franchise tax;
• Phasing out the property tax on business inventory.
This year’s regular session, as always during odd-numbered years, is a fiscal session, which Dardenne said presents an opportunity to rethink the state’s tax system. Many of the changes being discussed have been proposed before, he said.
“The administration is going to be supportive of anything we can do to improve the structure of our system so long as it’s revenue-neutral,” Dardenne said.
State government has stabilized its finances in recent years, made progress paying down its debt and shored up its rainy day fund, Dardenne said. Cutting taxes could jeopardize that stability, he said.
The tax burden in Louisiana is relatively low by national standards once various tax breaks are taken into account. High nominal rates, however, can scare off businesses and residents, while the complexity of the system makes it difficult to navigate and favors some taxpayers over others, critics say.
Implementing revenue-neutral tax changes is tricky, in part because it’s hard to know how a change will affect future collections. Senate President Page Cortez said economists will score each proposal to get a sense of the impact.
Other considerations include the needs of local governments. Many state lawmakers would like to eliminate the inventory tax, but local governments rely on that revenue, Cortez said.
“We don’t want to cut the budget,” he said. “We want it to be about fairness, get rid of [government picking] winners and losers, and make it more attractive to businesses.”