Governor proposes eliminating the state income tax and raising the state sales tax
Governor Bobby Jindal has presented the details of his tax reform plan to state lawmakers.
Some of the changes in the proposed rewrite of the state tax code, as outlined to lawmakers, include:
INCOME TAXES: Would eliminate Louisiana's personal income tax and corporate income and franchise taxes.
SALES TAXES: Would increase Louisiana's state sales tax rate from 4% to 5.88% percent, which would boost Louisiana's combined local and state sales tax rate average to 10.75%, the highest in the country. State sales taxes would be charged on a new list of services not currently taxed, like haircuts, landscaping, cable TV, pet grooming, tanning salon visits, agricultural services and data services.
Exempt would be health care, education, construction, real estate, financial services, advertising purchases, legal services, oil and gas services and funerals. Also, there would be rebate programs for low-income households and for retirees with less than $60,000 adjusted gross income to help offset the increased sales tax costs.
TOBACCO TAXES: Would increase cigarette taxes from 36 cents per pack to $1.41 per pack and would raise variable rates for other tobacco products to 68 percent of the manufacturer's price.
TAX BREAKS: Would eliminate more than 200 tax breaks, including 130 income tax breaks that would disappear with the removal of the income taxes.
ECONOMIC DEVELOPMENT INCENTIVES: Would maintain economic development incentive programs, but would make tweaks to limit the film tax break program.
Jindal said, "Eliminating income taxes will give more control to the taxpayer. Taxing what people spend instead of what they earn gives taxpayers more control over their own money."
"Eliminating income taxes will make Louisiana the best place to start a business. This is the best way to grow our economy and create good-paying jobs throughout the state," Jindal added.