Jindal plans to mitigate impact of higher sales taxes
Gov. Bobby Jindal wants to eliminate Louisiana's personal and corporate income and franchise taxes, while making up the revenue difference with higher sales taxes. Tim Barfield, head of the Department of Revenue, says the administration hopes to mitigate the impact on the poor and the working class by protecting tax exemptions on necessities, such as food for home consumption, prescription drugs and residential utilities. He suggested that, while lower-income people would lose the state's earned income tax credit, a similar benefit could be delivered to people who receive that credit, possibly through a rebate. Barfield was unable to say how high sales taxes would need to be raised to make the changes revenue-neutral, or which sales tax exemptions might be eliminated to broaden the base. However, he says raising the state's tobacco tax might be acceptable. Barfield says discussions thus far have been “high-level,” and says the administration is gathering input from stakeholders and legislators about how to proceed. “The taxpayers are going to be in a position to choose how they respond to it,” Barfield says. “It's going to be fair to all different industries… It's going to be stable, and it's going to grow with the economy.” Reaction to the plan was swift. “Gov. Jindal's plan to eliminate Louisiana's income and corporate taxes is one of the boldest tax reform plans that I have seen from a governor,” says John Nothdurft of The Heartland Institute, a right-leaning group. “Louisiana already has one of the country's most unfair tax systems, asking more of low-income people than those who are better off, and eliminating income taxes threatens to make this problem worse,” countered Jan Moller of the Louisiana Budget Project, which leans to the left. —David Jacobs
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