Louisiana business groups expressed disappointment that Louisiana voters recently rejected a proposal to create a streamlined, statewide system to oversee sales tax collections.
Constitutional Amendment 1, which would have created the State and Local Streamlined Sales and Use Tax Commission, went down to defeat on Nov. 13, garnering 48.2% of the vote while 51.8% opposed the plan. Amendment 1 supporters had complained that the current patchwork system of parishes handling their own sales tax collections was complicated and burdensome to businesses.
The election outcome leaves a glaring problem in place that hurts the state’s business climate, according to Stephen Waguespack, president and CEO of the Louisiana Association of Business and Industry (LABI).
“The fact remains that small businesses are desperate for a solution to the costly and regulatory burdensome current tax collection system imposed by local collectors,” Waguespack said in an email to the Louisiana Record. “The current system is making us uncompetitive as a state and is especially harmful to Main Street businesses all across Louisiana. The status quo is not sustainable, and we will continue working on this critical issue until a workable solution is implemented.”
But LABI was heartened that voters did approve Amendment 2, an income tax reform measure on Saturday’s ballot. That measure reduced the top state individual income tax rate to 4.75%, compared to the current 6%, and disallowed the deduction of federal income tax amounts from what’s owed on Louisiana income taxes.
“While there is much more work to be done, Louisiana is now finally on the path to a more competitive income tax code to rival Southern competitors like Texas, Tennessee and Florida,” Waguespack said.
The state director of the National Federation of Independent Business, Dawn McVea, said in a prepared statement that Amendment 1 likely failed due to resistance from local parish officials, Orleans Parish in particular. The measure would have allowed small businesses in Louisiana to better compete with online retailers, McVea said.
“The only way to capture all the revenue due to the state and local governments via online sales tax collection and thereby potentially reduce our highest-in-the country sales tax rate is to move to a centralized tax collection,” she said. “We look forward to supporting a renewed effort to pass the legislation and amendment in 2022.”