DALLAS — Gov. Bobby Jindal asked Louisiana lawmakers to wipe out the state income tax at the end of 2013 and replace the lost revenues with a higher, broader sales tax.
Jindal outlined the revenue-neutral $3.6 billion plan at an unusual personal appearance before Thursday's joint session of the House Ways and Means Committee and the Senate Revenue and Fiscal Affairs Committee.
The $2.66 billion a year of revenue from the personal and corporate income taxes would be replaced with an increase in the state sales to 5.88% from the current 4%. The 47% increase in the rate would bring in an additional $2 billion.
The average combined state and local sales tax in Louisiana is 8.85%. The Jindal plan would bring the average tax rate to more than 10%, and almost 11% in New Orleans and Baton Rouge.
Other new revenues in Jindal's plan would include $961 million a year from extending the sales tax to 37 services not currently taxed, $370 million from taking the tax on a pack of cigarettes to $1.41 from the current 36 cents, and $289 million by cutting in half some of the oil and gas industry's energy severance tax credits.
The tax plan will evolve during debate in the Legislature, Jindal said.
"It's not etched in stone," he said.
The Legislature will consider the tax changes when it convenes April 8. Raising the sales tax rate will require a two-thirds majority in both chambers.
Swapping the income tax for a higher sales tax will generate jobs, Jindal said.
"States with no income taxes are outperforming other states in terms of economic growth and population growth," he said." Our plan will keep Louisianians here and help bring our sons and daughters back home to find good-paying jobs and raise their families."
House minority leader Jon Edwards, D-Amite, an announced candidate for governor in 2015, said the higher sales tax rate would hurt local retailers and increase the total tax bill for most families.
"It will raise taxes on most Louisiana families, Louisiana workers, and Louisiana small businesses in order to give tax breaks to out-of-state corporations and the wealthy," Edwards said. "We would have the highest sales tax in the nation with the most regressive tax structure in the nation."
If Congress allows states to collect taxes on Internet purchases, Jindal said, the proposed tax rate could be less.
Jindal said an additional $114 million a year would be generated by eliminating more than 200 tax credits and exemptions, including 120 that would disappear with the demise of the income tax on Jan. 1, 2014.
Tax credits totaling $440 million a year would remain, as would $400 million of economic development incentives.
The sales tax would be extended to some new services under Jindal's proposal, including lawn care and telecommunications, but financial, legal, health care, funeral, and education services would be exempt.
The state sales tax generated $2.6 billion in fiscal 2012. The personal income tax brought in $2.5 billion. Corporate income and franchise taxes totaled $374 million last year.