Demoting major tax exemptions and restrictions from the Louisiana Constitution to statutes could give lawmakers the tools to simplify the state’s complex tax system, the Public Affairs Research Council of Louisiana (PAR) said in a new paper.
PAR recommended keeping the current constitutional requirement that raising taxes requires the approval of at least two-thirds of the members in each chamber of the Louisiana Legislature. Adding a new tax exemption also should take a two-thirds vote, PAR argued.
The paper recommends removing constitutional caps on income tax rates and brackets and moving the income tax deduction for federal income taxes paid from the constitution to statute, allowing lawmakers greater leeway to eliminate or alter those exemptions.
The three biggest sales tax exemptions – for food prepared at home, medicine and utilities, which are worth about $1.1 billion per year – also could be moved to statute, although the paper recommended creating “appropriate protections” for low-income households if those exemptions are removed or lowered.
If exclusions are eliminated, current high rates could be reduced, the paper noted.
PAR also wants to eliminate constitutional barriers to creating a centralized sales tax collection system so that the same set of goods and services are taxable at the state and local level. The current decentralized system is said to be difficult to navigate for businesses operating in more than one tax jurisdiction, but local collectors say collecting their own taxes is the best way to ensure the money is spent the way local voters and taxpayers want it spent.
House Speaker Clay Schexnayder, R-Gonzales, is expected to file legislation this year to pave the way for a centralized system.
Amending the state constitution requires approval from two-thirds of the members of each legislative chamber and a majority of voters.
Other proposals among PAR’s recommendations for changing the tax-and-spending provisions of the state constitution include:
• Raising the bar for amending the constitution, which could include requiring legislative approval in two consecutive regular sessions and only scheduling votes during high-turnout state and national elections;
• Amending the state constitution to clarify legislators can call a limited constitutional convention focused on certain subjects;
• Eliminate the state’s constitutionally protected but inactive funds while tweaking the rules for many others to allow lawmakers to better prioritize state spending. Nine funds could be moved entirely into statute, seven could be eliminated and six trust funds could be re-established with more flexible spending options, PAR said.
PAR is a private, nonpartisan, member-supported nonprofit research organization.
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