Know the Facts: Sales Taxes & Income Taxes

BATON ROUGE – With news outlets continuing to report on the Governor’s goal of eliminating personal and corporate income taxes, some comparisons have been made between the sales tax and the income tax, and what it means for individuals and the state. Here are some facts and figures to keep in mind:

1. Sales tax is a MORE STABLE form of revenue compared to the personal income tax. According to the Louisiana Revenue Estimating Conference (REC) and the Louisiana Department of Revenue (LDR), sales tax collections have historically been MORE STABLE than personal income tax collections.  (REC Historical Data; LDR Annual Reports). Additionally, according to R. Alison Felix, who authored “The Growth and Volatility of State Tax Revenue Sources in the Tenth District,” state sales taxes have proven to be a more stable source of revenue for year-to-year budgetary expenditures.”

2. Over a 30-year period, the nonpartisan Tax Foundation used 26 different economic studies to determine sales taxes were MORE BENEFICIAL for economic growth than both personal and corporate income tax. (Tax Foundation Special Report No. 207 December 18, 2012)

3. Eliminating personal income tax will create a business climate that encourages MORE BUSINESS INVESTMENT and MORE JOBS. According to the nonpartisan Tax Policy Center, America’s economy would steadily grow by “0.6 percent larger than otherwise after two years; 1.8 percent larger after ten years; and 3.6 percent larger in the very long run” if the nation switched to a tax system that relied on sales tax, not income tax. (Tax Policy Center) 

4. Sales tax grows with the economy. When compared to other sources of revenue, sales tax is relatively stable during economic downturns resulting in more revenue as the need arises. 

5. Governor Jindal’s proposal will KEEP the Constitutional protections for the exemptions of food for home consumption, prescription medicine, and residential utilities. These exemptions result in the average individual or family with income under $30,000 per year having almost half of their annual purchases exempt from state sales tax. These progressive provisions lessen the impact of the sales tax on lower income individuals and families.

6. In order to offset unfair impacts to low income groups, Governor Jindal’s proposal will set aside funding to operate an Earned Income Tax Credit or a similar mechanism. 

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2011 Louisiana Annual Sales Tax Holiday – August 5 & 6

The majority of consumer purchases are exempt from state sales taxes during the 2011 Louisiana Annual Sales Tax Holiday on Friday, August 5, and Saturday, August 6.

The sales tax holiday exempts the first $2,500 of the purchase price of each eligible item from the four percent state sales tax. The law describes eligible items as “individual items of tangible personal property for non-business use.”

The Louisiana Department of Revenue encourages shoppers to retain receipts for school supplies, uniforms, and educational equipment required by schools.  Expenses paid this year are eligible for tax deductions on 2011 Louisiana Individual Income Tax Returns due May 15, 2012.  In order to claim the deductions, you must be able to claim the student as a dependent on your state individual income tax return, and you must be able to provide documentation for the expenses.  Visit www.revenue.louisiana.gov/schooldeduction for more information.

Purchases are eligible for the sales tax exemption under the following conditions:

  • The customer buys and accepts delivery of eligible property;
  • The customer places property on layaway;
  • The customer acquires property that was previously placed on layaway; or
  • The customer places an order for immediate delivery, even if delivery must be delayed, provided that the customer has not requested delayed shipment.

The Louisiana Annual Sales Tax Holiday exemption does not apply to:

  • Vehicles subject to license and title
  • Meals prepared for consumption on premises or to-go
  • Taxable services such as hotel occupancy, laundry services, printing services, telecommunication services, the furnishing of cold storage space, leases or rentals of tangible personal property, repairs to tangible personal property, and admission to athletic, amusement, or recreational facilities or events

For retailers, a $25-per register tax credit is available for the reprogramming of cash registers in preparation for the sales tax holiday.

Visit www.revenue.louisiana.gov/taxholiday2011 for more information.

 

 

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LDR Video: 2011 Louisiana Hurricane Preparedness Sales Tax Holiday

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‘Tax help for businesses’

From the Advocate Acadiana Bureau:

Tax help for businesses

The Louisiana Department of Revenue will host a free seminar on sales tax at 2 p.m. May 16.

The seminar will be held at the department’s Lafayette office, 825 Kaliste Saloom Road.

 

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2010 Louisiana Annual Sales Tax Holiday – August 6 & 7

The 2010 Louisiana Annual Sales Tax Holiday takes place Friday, August 6, and Saturday, August 7.

The sales tax holiday provides an exemption from state sales tax on the first $2,500 of the purchase price of most individual items of tangible personal property for non-business use. The state sales tax is payable on the portion of the purchase price of any individual item in excess of $2,500.

The holiday applies only to the 4 percent state sales tax. Local sales taxes still apply.

More information at www.revenue.louisiana.gov.

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Revenue Information Bulletin No. 10-012: ‘Regarding Sales Tax Treatment of Hotel Accommodations for Employees of the Federal Government’

The Louisiana Department of Revenue has released Revenue Information Bulletin (RIB) No. 10-012 regarding the sales tax treatment of hotel accomodations for employees of the federal government.

Louisiana Revised Statute 47:302(C), 47:321(C), and 47:331(C) impose an aggregate 4% state sales tax on the sale of certain enumerated services. Under R.S. 47:301(14) the term “sale of services” includes the furnishing of sleeping rooms, cottages, or cabins by hotels. A “hotel,” as defined by La. R.S. 47:301(6)(a), means any establishment engaged in the business of furnishing sleeping rooms, cottages, or cabins to transient guests, where such establishment consists of six or more sleeping rooms, cottages, or cabins at a single business location.

Under La. R.S. 47:301(8)(a) a “person” includes any “individual, firm, co-partnership, joint adventure, association, corporation, estate, trust, business trust, receiver, syndicate, this state, any parish, city and parish, municipality, district or other political subdivision thereof or any board, agency, instrumentality, or other group or combination acting as unit, and the plural as well as the singular number.

Visit revenue.louisiana.gov to read the full text of RIB 10-012.

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LDR Video – Parish E-File

Parish E-File.com is a free, secure web application that allows businesses to file multiple parish sales & use tax returns and remittances to the state and to local taxing authorities throughout Louisiana from one online location.

To learn more, visit www.parishe-file.com.

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LDR News Release – Parish E-File.com simplifies sales taxes

BATON ROUGE – Businesses that collect and remit sales taxes to state and local governments can reduce the time, effort, and paperwork involved by using Parish E-File, a free public service from the Louisiana Department of Revenue.

Parish E-File is a web application that provides a secure, convenient method of filing multiple state and parish sales and use tax returns throughout Louisiana. There are no fees associated with its use.

Businesses that operate multiple locations throughout the state will find Parish E-File especially useful. Instead of filing separate paper sales and use tax returns with each local taxing authority, the entire process can be handled from one central location online.

Parish E-File allows business to remit sales tax collections as well.

In 2009, Parish E-File logged an average of 36,550 sales and use tax returns per month and collected more than $800 million in taxes for state and local governments.

For more information, or to register, visit www.parishe-file.com.

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Report: ‘Tax revenue drop causes $197M La. budget deficit’

Louisiana’s Revenue Estimating Conference forecast a sharp reduction in state revenues for the rest of this fiscal year and into the next.

From the Associated Press:

Louisiana’s revenue forecast dropped $197 million Thursday, driven by plummeting state sales taxes as shoppers shut their wallets and businesses shrink spending in the tight economy.

The state income projecting panel, the Revenue Estimating Conference, revised tax collection estimates sharply downward for the current fiscal year that ends June 30, continuing a recent trend of forecast revisions to reflect drops in tax collections.

Thursday’s changes create a deficit in the $29 billion budget that must be closed in the coming weeks.

Economist Greg Albrecht said sales tax revenue has slumped, and the uptick in severance and royalty money from oil prices isn’t enough to combat it. Albrecht, the chief economist for the Legislative Fiscal Office, said he projects a more than 14 percent decrease in sales tax collections compared to last year — and he said that could get worse.

“There’s just a massive retrenchment of spending for households and businesses,” said Albrecht, whose revenue projections were selected by the conference as the official forecast. “People just aren’t spending.”

Estimates of business tax collections also were cut, along with revenue from gambling taxes.

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