Messing with the tax structure
By Carrie Grace Henderson / Manship School News Service
BATON ROUGE -- The House Ways and Means Committee picked over two tax reform bills Tuesday that would allow the state to collect sales tax in advance and install a lower sales tax that eliminates most exemptions.
House Bill 63, by Rep. Lance Harris, R-Alexandria, would return sales tax collection to a pre-2009 system in which taxes are collected in advance from the wholesalers rather than retailers. He said he believes the state will get its money and reduce delinquencies.
Harris’s bill would require the wholesaler to charge the retailer a sales tax in the amount the retailer would be required to collect from the consumer upon sale. Retailers would then deduct the sales tax paid to the wholesaler from their tax liability.
The bill does not increase taxes or shift the tax burden, but collects sales taxes at a different time in the cycle, which Harris says will improve efficiency and help fight fraud.
“There are those that are nefarious in their methods of doing business; they are collecting their tax and not remitting it,” Harris said. “We need to do these types of efficiencies.”
Harris said collecting earlier in the process from a small number of wholesalers will stop retailers from using “Zappers,” computer programs that scrub transactions from their invoices and allow them to pocket tax money.
BEcause the bill only changes the tax collection process and does not raise or lower revenue, the fiscal notes reflect no change in revenue to the state, but Harris said it would make it harder for businesses to avoid their tax liabilities and thus produce revenue the state is currently not getting. It also keeps disreputable businesses from getting a financial advantage over competitors, he added.
But some critics of a universal application of this bill say it will cause a burden on those who file and collect taxes. They also point out that cash-based businesses, like gas stations and restaurants, are in a position to commit fraud.
Rep. Barry Ivey, R-Baton Rouge, suggested the law may “cast too wide a net,” and Harris said he would work with business owners to create the law that is best for Louisiana.
"[In order not to have to raise taxes and revenue], it behooves us to make sure every penny of money that is owed is remitted to the state of Louisiana,” Harris said.
Among the dozen or so bills considered by the committee Tuesday was House Bill 220 by Tanner Magee, R-Houma. It is an alternative to the governor’s tax proposal.
Magee’s bill, as it stands, would reduce the sales and use tax to two pennies on the dollar and eliminate numerous tax exemptions and exclusions currently attached to the five-penny tax.
HB220 would create a $2.6 million loss for FY2017-18, but Magee said his proposal was just to start the conversation and create a more improvement tax policy for the state. He indicated HB220 is a work in progress, but he warned that “at some point, we have to quit tinkering with it and just make it the sales tax rate of Louisiana.”
“Let’s have an honest negotiation and discussion in good faith. At the same make is economically competitive with brother and sister states.”
Photo: Rep. Tanner Magee, R-Houma, and Rep. Julie Emerson, R-Carencro. Magee introduced an alternative to Gov. John Bel Edwards’ tax bill Tuesday. Credit: Sarah Gamard