Local municipalities wouldn’t tax services under state overhaul plan

If the massive tax overhaul being proposed by Gov. Bobby Jindal becomes law, most services not currently taxed by the state would have to charge state sales tax. But local districts wouldn’t be able to charge their own taxes on services under the current proposal, a Department of Revenue spokesman confirms. Tom Ed McHugh, executive director of the Louisiana Municipal Association—which has not taken a position for or against the tax overhaul—says state officials mentioned the possibility of including a local option during early discussions with local officials, many of whom are concerned that a higher state sales tax would make it tougher for local governments to renew their own sales taxes or pass new ones. The idea of allowing local sales taxes on services to mitigate that issue was discussed, but didn’t survive into the public proposal, McHugh says. “There is concern if [the tax overhaul passes] around the ability of local governments in the future to pass sales taxes,” says Chris Loar, an Ascension Parish councilman. “I think you’ll see a shift toward property taxes.” Jindal wants to eliminate income and franchise taxes, while raising the same amount of revenue by collecting more in sales taxes and eliminating or curtailing some tax breaks. LED Secretary Stephen Moret says business leaders favor simple, transparent tax systems, and argues that the changes would make the state more attractive for business investment. —David Jacobs