Wednesday, April 17, 2024

Sales tax centralization keeps moving in Louisiana Senate

by BIZ Magazine

By David Jacobs | The Center Square

A proposal to amend the Louisiana Constitution and centralize sales tax collection in took another step forward Monday.

The Senate’s Revenue and Fiscal Affairs Committee advanced House Bill 199 by House Speaker Clay Schexnayder without objection, though sticking points remain that likely won’t be resolved in the current session.

Under Louisiana’s unusual system, local officials have control of local sales tax collection, which they have argued ensures they get their money quickly and are able to spend it as local taxpayers and voters want it spent. Business advocates, however, said the system is difficult to navigate for companies that sell in multiple jurisdictions, particularly for small companies or companies from outside the state that are unfamiliar with Louisiana’s complex tax structure.

The U.S. Supreme Court may have added urgency to the debate with its Wayfair decision, which cleared the way for states to charge sales tax on internet sales by out-of-state companies, but said states placing an “undue burden” on interstate commerce could run afoul of the U.S. Constitution.

“Put it this way,” Jay Adams, a Jones Walker tax attorney, said when asked in a recent interview whether the current system likely would be found unconstitutional under Wayfair. “I would take the case on the taxpayer’s behalf.”

The state revenue department oversees sales tax collection in most states. In the task force discussions that led to HB 199’s creation, representatives of local officials didn’t want to give up their authority to a purely state-controlled entity, said Jason DeCuir, who chaired the group.

“That was a line in the sand that was drawn on day one,” he said.

The bill calls for an eight-person commission, with four representing state interests and four representing local officials. At least two-thirds of them would have to agree to change commission policy.

While HB 199 includes the potential state constitutional amendment calling for the commission, which two-thirds of lawmakers in each chamber and a majority of voters would have to approve, the companion bill creating the laws that govern the specifics of how the new system would operate is not available in the current session. Under the bill’s current version, the public vote wouldn’t be held until November 2022.

Perhaps the biggest sticking point remaining to be resolved regards audits. Local officials want to keep their ability to audit local taxpayers, arguing they know what’s going on in their areas better than someone in Baton Rouge, but businesses don’t want to be subjected to multiple audits by multiple jurisdictions.

Desiree Lemoine, on behalf of Iberville Parish, said the bill directs the commission to “streamline” the audit process, which she described as a loss of parish authority, though the bill doesn’t specify what that might mean. Sales tax collections make up 75% of the parish’s budget, so the uncertainty concerns her, she said.

“It is irresponsible for Iberville Parish to support a bill, and have to pass a bill to find out what’s in it,” she said, expressing her opposition while acknowledging the bill was about to advance.

The Police Jury Association, of which Iberville is a member, turned in a white card indicating neither support nor opposition, though the association’s Guy Cormier also has expressed concerns throughout the process. He said he hoped he could find himself able to support the bill as it is tweaked.

“Never let the perfect get in the way of the good,” said Sen. Bret Allain, the Franklin Republican who chairs the Revenue and Fiscal Affairs Committee. “It ain’t perfect, but it’s really good.”

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