Sunday, June 16, 2024

A look at Edwards’ proposed changes to sales, income taxes

by BIZ. Staff

BATON ROUGE, La. (AP) — As a $1 billion budget gap draws closer, Gov. John Bel Edwards announced his favored approach to closing the financial hole with a package of tax changes. The ideas come from a list of suggestions offered a year ago by a nonpartisan study group created by lawmakers.

The Edwards administration said some details of the package are expected to be tweaked as the state determines the impact the federal tax changes expected to win approval from Congress could have on Louisiana’s tax collections.

The proposals backed by the governor would:

  • Increase the individual income tax for those who itemize on their personal income-tax forms, by cutting in half the percentage of federal excess itemized deductions they can deduct; and change the brackets for calculating the individual income tax, boosting taxes on middle- and upper-income earners. The combined proposals are estimated to raise about $500 million a year.
  • Continue to charge businesses higher sales taxes for utilities and remove more than 180 sales tax breaks on the books, to generate about $300 million a year.
  • Newly charge state sales taxes on some services such as cable television and streaming services, debt collection services and repair services, to raise about $200 million a year.
  • Continue reductions made in 2015 to tax-break programs that largely assist businesses, to generate about $60 million annually.
  • Allow a 1 percent temporary state sales tax enacted in 2016 that raises about $900 million a year to expire. Edwards, however, said he’d allow a short-term renewal of the tax “as a bridge” until other tax types approved by lawmakers start bringing in revenue for the state.

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