Many Louisiana retailers who sell big-ticket items like cars, guns, appliances and furniture don’t believe the additional 1 cent of state sales tax that will be collected beginning April 1 will cause sales to decrease, though one Lafayette auto dealer says the new penny “certainly won’t help,” The News-Star reports.
The Legislature and Gov. John Bel Edwards approved the temporary extra penny on top of the existing 4 cents during a special session earlier this month to address massive budget deficits this year and next.
Louisiana’s Legislative Fiscal Office estimated the new penny will generate $214.2 million for the rest of this fiscal year and $880.7 million during each of the next two full fiscal years before expiring June 30, 2018.
“We supported the 1 percent because of the condition of the state budget; we wanted to be part of the solution,” says Bob Israel, longtime leader of the Louisiana Automobile Dealers Association. “I don’t expect 1 percent will be the deciding factor in somebody buying or not buying a new car, but it is an additional cost to our customers.”
Auto sales make up about 18% of all sales taxes collected in the state. The additional penny would cost consumers who buy a $20,000 vehicle $200 more, a $30,000 vehicle $300 more and so on.
Todd Citron, general manager of Hub City Ford in Lafayette, and other retailers in the city test drove an additional penny for most of last year after voters approved a local 1-cent sales tax to help build a new terminal at Lafayette Regional Airport.
“We already weathered the increase last year,” says Citron, vice-chairman of the Louisiana Automobile Dealers Association. “We were very concerned, but we believe the downtown in the oil and gas economy was much worse for sales than the 1 cent.”
Citron says auto sales in his market are down 20% or more because of the contraction in the energy sector. “I’d say it started about six months ago and has been worse than we we expected,” he said. “The additional 1 cent certainly won’t help business, but we’re more concerned about the overall economy.”
Mike Spillers, whose family has owned and operated Spillers Furniture and Appliances in Minden for 48 years, says he doesn’t think the extra penny will affect sales, but that doesn’t mean he likes it.
“Everything they’ve done so far (in the Legislature) goes against my grain, my very being, from cutting higher education and TOPs to giving us the highest sales taxes in the union (local and state combined),” Spillers says.
