Sales tax dilemma

Sales tax dilemma

The temporary one-cent sales tax hike approved by the Legislature last year gave Louisiana the highest combined (state and local) sales tax is in the land, according to the Tax Foundation.Critics have long complained that the sales tax is cumbersome to administer and is riddled with too many exemptions.

Number of the Day

$510 million: Annual revenue raised from House Bill 632, which would increase the state gasoline tax by 17 cents per gallon. (Source: Nola.com/Times Picayune)

The temporary one-cent sales tax hike approved by the Legislature last year gave Louisiana the highest combined (state and local) sales tax is in the land, according to the Tax Foundation. Critics have long complained that the sales tax is cumbersome to administer and is riddled with too many exemptions. On Tuesday, the House Ways and Means Committee heard testimony on bills that would create more exemptions – and a separate bill that would do away with all exemptions. The Advocate’s Tyler Bridges has the story:

On a day when members of the House Ways and Means Committee heard testimony on sales tax bills without taking votes, no one talked about the Tax Foundation. Instead, lawmaker after lawmaker told his colleagues on the committee that the tax break he promoted was necessary to produce more investment and jobs…(Kimberly) Robinson initially demurred when asked afterward about committee members sponsoring bills to create or restore more tax exemptions, for fear of offending lawmakers, but then said, “There’s always a valid reason for a particular tax exemption or exclusion. The difficulty comes in deciding which exclusions or exemptions should stay in the tax code.”

Rep. Tanner Magee of Houma, meanwhile, has a business-backed bill that would cut the state sales tax from 5 percent to 2 percent and eliminate all exemptions. The Legislative Fiscal Office estimates it would cost the state $2.7 billion next year – which is more than half the discretionary dollars in the state budget.

“One of the reasons we have such a high tax rate is that we have so many exemptions and exclusions,” Magee told committee members.

If lawmakers can’t agree on tax reform this session, the path of least resistance would be to simply renew the taxes already on the books and let the next governor try their hand at revamping Louisiana’s broken tax structure. This morning, Rep. Sam Jones of Franklin filed legislation to do just that. His House Bill 638 would extend the “temporary” sales tax to June 2023.

 

The case against Medicaid work requirements

Legislation that was scheduled to be heard this morning in the Senate Health & Welfare Committee would require able-bodied adults to work at least 20 hours a week as a condition of getting Medicaid coverage. As LBP’s Jeanie Donovan explains in a new blog, the vast majority of Medicaid recipients are either already working, or are categorically unable to work due to age, pregnancy, disability or being underage.

Medicaid work requirements have the potential to drive up the cost of healthcare for everyone. Those who lose Medicaid coverage because they don’t meet the work requirements will still get sick and require medical care. They may end up being hospitalized for avoidable health problems, but won’t have insurance to pay for that care. Unpaid costs will fall on local hospitals, the state, and other health care providers. Eventually the costs of uncompensated care are passed on to all health care consumers in the form of higher premiums.

 

Pleading for help

Tuesday marked the annual ritual where members of the public got their chance to weigh in on the state budget, and remind lawmakers that the numbers on the spreadsheets before them have people behind them. With Louisiana facing a $440 million shortfall in the upcoming budget year, budget cuts are hitting virtually every program in state government. The AP’s Melinda Deslatte was there:

With tearful stories, people sought boosted financing for health programs for the elderly and disabled. They asked for more dollars for rural hospitals. They requested increased staffing at state facilities that care for people with disabilities and mental health problems. … Several Republicans on the committee suggested the more than $14 billion budget planned for the Department of Health should be enough to pay for the families’ requests. Rep. Tony Bacala, a Prairieville Republican, said the agency needs to spend dollars more wisely. Committee Chairman Cameron Henry, a Republican from Metairie, said some dollars allocated to unfilled jobs could be spent instead on services for people with disabilities.

 

Edwards rightfully highlights Medicaid expansion
Louisianans overwhelmingly support Gov. John Bel Edwards’ decision to expand Medicaid coverage to low-income adults. But they remain opposed to the Affordable Care Act, or Obamacare, that made the expansion possible. That’s according to the Louisiana Survey, which was the subject of this morning’s editorial in The Advocate:

Edwards was thus probably right to highlight Medicaid expansion in his address to the opening session of the 2017 Legislature. Many GOP members of House and Senate balked at Medicaid expansion when it was a party litmus test during the terms of former Gov. Bobby Jindal; now, though, the governor’s actions have provided a significant financial lifeline for working people in low-wage jobs who had no meaningful access to health care before.

 

Number of the Day

$510 million: Annual revenue raised from House Bill 632, which would increase the state gasoline tax by 17 cents per gallon. (Source: Nola.com/Times Picayune)