Jindal: Out, corporate & income tax. In, increased sales tax.

[DINGO Joe]

Right now the state collects a 4% sales tax (groceries and medicine are exempt but not clothing) and the parishes on average collect 5% on everything for a total of 9%.  It's estimated that the state would have to raise it 3% to keep it revenue neutral.  That would make the sales tax 12%.

Psychologically, 12% sounds huge to me, even if I'm not paying  state income tax anymore.  I personally have to go to Mississippi about once a week and it would be worth the trouble on my part to stop at a Walmart  and make my mundane purchases (razors, cat food, etc),  and of course clothing and electronics would be purchased while out of state.  The biggest rubs would be dining out and car purchases. 

Louisiana does rely on tourism as a major employer and revenue generator.  Would tourists blindly accept that rate or would they decide to go somewhere cheaper?

On edit--utilities are exempt also.

[DINGO Joe]

Just for frame of reference:

Sales tax brought in 2.6 Billion for the state last year

Income, Corporate and franchise taxes brought in 2.9 Billion

That would mean the sales tax would have to more than double to make up the revenue, but the state says there are 2.5 Billion in exemptions to the sales tax with groceries, utilities and medicine making up $700 million.  Those wouldn't be touched, but areas that aren't taxed now, like some services like landscaping (but oddly enough not accounting or lawyer services) would be subject to sales tax.

I saw one story where auto dealers were concerned about the proposal, but if the state capped the tax for autos they were OK with it (in other words if they get an exemption, they're OK with it).

The state also pulled in 1.4 billion in severance tax revenue last year, which is actually down from 2.2 billion in 2009 as drillers have moved on to more profitably and liquid rich places to drill.


Again, from my modest middle income point of view, getting rid of the income tax would save me money and I would attempt to spend out of state in lower sales tax states to avoid paying that money back into the state.  What percentage of the state can or would do that I don't know.

[DINGO Joe]

Soaking the tourists is pretty much the bedrock of the Florida tax system, and if you've ever looked at a hotel bill that goes for just about everywhere.  Ultimately there is some kind a breaking point, though I don't pretend to know what that might be.

I think we are also overstating the importance of tourist revenue too.  The price of natural gas probably impacts state revenue more than tourist spending.