A proposed constitutional amendment would transfer the authority to collect sales taxes from local taxing entities to the state.
Supporters say the change would simplify Louisiana’s convoluted sales tax system and create a more business-friendly taxing environment. But politically influential local officials, who historically have opposed such efforts, say they don’t necessarily trust state government to collect and remit their taxes in a fair and timely fashion.
The state constitution gives any local political subdivision or school board the right to levy sales taxes as approved by local voters. A single entity such as the school board collects and distributes those taxes to other taxing entities within its parish.
House Bill 57 by Rep. Tanner Magee, a Houma Republican, calls for a constitutional amendment that would strip local governments of that right and require the legislature to provide for collection of all sales and use taxes levied in the state.
“Each parish in Louisiana oversees its own sales tax collection, audits, rates and even interpretations of what is taxed,” the Public Affairs Research Council of Louisiana says. “No other state has this degree of local independence and control of its sales tax system. Louisiana has an unusually large number of exemptions and exclusions, and state and local governments lack uniformity about what is taxable.”
The current situation creates confusion for businesses, especially when taxing entities disagree. The legislature created the Louisiana Uniform Local Sales Tax Board to help resolve such disputes, but the board’s funding mechanism has been deemed unconstitutional by a district court and its rulings do not carry the force of law. The Louisiana Sales and Use Tax Commission for Remote Sellers, formed to collect taxes on internet sales, also could face a court challenge over whether it is creating undue burdens on taxpayers or infringing on the rights of local collectors.
Advocates for a simplified system, such as the state chapter of the National Federation of Independent Business, would like to replace all that bureaucracy with a single, unified collector. But local officials argue that collecting their own taxes helps them ensure the money is used how their voters told them to use it.
“Local tax collectors, who have a sacred and constitutionally protected right to collect their own taxes, have the boots on the ground,” said Karen White, executive counsel of the Louisiana Municipal Association.
For example, let’s say a grocery store in Thibodaux is doing noticeably more business than it used to, yet is remitting about the same amount of sales taxes. A local official familiar with their community would know something was up a lot sooner than someone in Baton Rouge.
“Sales taxes, depending on the jurisdiction, can comprise a large part of a municipality’s budget, so it’s important for that revenue to be captured as quickly as possible,” White added. “You would want to avoid any system where there is a built-in delay, where someone would have to wait to receive that revenue [from a state collector].”
Constitutional amendments must be approved by at least two-thirds of the legislators in both the state House and Senate and a majority of voters.
