A federal judge this week heard arguments about whether a lawsuit challenging Louisiana’s sales tax system as a violation of the U.S. Constitution’s commerce clause should be dismissed.
Judge Jane Triche Milazzo of the Eastern District of Louisiana heard arguments from the attorneys representing the plaintiff, Halstead Bead of Prescott, Ariz., and defendants among the groups supporting the plaintiff are the New Orleans-based Pelican Institute for Public Policy, National Taxpayers Union Federation and the Goldwater Institute.
Halstead Bead, a jewelry and craft supply wholesaler, filed the legal challenge last year after Louisiana voters failed to pass a sales tax simplification plan on the state ballot. Among the defendants are parish officials and the state’s secretary of revenue, Kimberly Lewis.
Attorneys for the state Department of Revenue have filed a motion to dismiss the lawsuit, noting that the plaintiff seeks to declare a section of the state constitution governing sales tax collections in violation of the U.S. Constitution. The statutes in question outline how Louisiana parishes can collect and levy taxes but have nothing to do with the Department of Revenue, the motion says.
Milazzo will next decide whether or not to grant the motion to dismiss the complaint, according to plaintiff attorney Sarah Harbison, the Pelican Institute’s general counsel.
“She asked a lot of really great questions” about how the complex sales tax system is, Harbison told the Louisiana Record.
Another plaintiff’s attorney, Joseph Bishop-Henchman, said the state’s complicated system and the hundreds of taxing jurisdictions within the parishes, as well as the lengthy local ordinances, is taking an economic toll on the state.
“Anecdotally, we know there’s a lot of businesses that will not sell in Louisiana because of the uniquely complicated system that Louisiana has,” Bishop-Henchman told the Record. “We think there’s a lot of business being left on the table.”
Supporters of streamlining Louisiana’s sales tax system favor having one central collection point, rather than a patchwork of jurisdictions where rates can vary substantially. In addition, they say small retailers around the nation lack adequate resources to navigate the state’s sales tax jurisdictions and ordinances.
The Louisiana House speaker, Clay Schexnayder, has also indicated he may push for another sales tax ballot measure to give voters a second chance to reform the system, Harbison said.