The failure of Louisiana Gov. Bobby Jindal’s plan to swap the state income tax for a higher sales tax isn’t the end of the story, Treasurer John Kennedy said.
“Now that the governor has withdrawn his plan we need a Plan B,” he said, adding that a new plan should be submitted to voters in a statewide election.
The income tax rate could be cut and the sales tax rates should flattened, Kennedy said, but the plan to offset the lost revenues through a higher sales tax with a broader base had little support.
“Though well-intentioned, the governor’s plan was not going to pass,” he said. “Nor should it, if for no other reason than it would have raised taxes on businesses by $500 million.” Each tax exemption or exclusion should be effective — if not, it should be stricken, Kennedy added.
The state should cut its 19,000 consulting contracts by 10%, and the rest should be asked to give a 5% discount “when the state has superior bargaining strength, which is most of the time,” he said.
“This sounds simple, and mathematically it is, but this exercise will require extraordinary political will,” Kennedy said. “The buffet may be large — 19,000 contracts and 468 exemptions worth $4.8 billion — but each has a constituency.”
A centralized debt collection system underway in the Legislature could bring in at least $158 million of additional revenue. “Forget about raising the state sales tax rate or taxing services,” he said.
The corporate and personal income taxes make the state less attractive to businesses as well as workers.
“I appreciate Gov. Jindal’s plan to end Louisiana’s personal and corporate income tax,” Kennedy said. “Our state needs a tax code that looks like somebody designed it on purpose.”
