BATON ROUGE, La. -- Gov. Bobby Jindal is calling for the elimination of all Louisiana income and corporate taxes.
The proposed tax reform plan is in its early stages and could mean a significant spike in the state's sales tax.
Right now, nine states in the country don't have a state income tax, and if Jindal gets his way Louisiana will join that list.
This week, the governor met with lawmakers and administration officials to talk taxes.
"The governor is proposing to eliminate the state income tax on individuals and corporations and their franchise tax. As a tradeoff he would propose we raise the sales tax by 1.6 percent level," said Senate President John Alario, R-Westwego.
Alario said the governor's tax reform plan would help spur economic development by drawing more corporations and retirees to the state.
If the state's income tax disappears, the Associated Press reports an estimated loss of nearly $3 billion. The governor is proposing increasing the sales tax as one way to fill that gap.
"It's a pretty radical proposal. I mean clearly his incentive, which is to attract businesses, I think that would work in that direction," said UNO economist Dr. Walter Lane.
Lane said if the state's sales tax were to go up, it would be a heavy blow to the working class.
"The downside is that sales taxes tend to be regressive. They fall much heavier on lower income people than they do on higher income people, whereas income taxes do the exact opposite. They're progressive. They fall more on higher income people," Lane said.
Eyewitness News caught up with taxpayers trying to stay dry at the bean gallery in Mid-City Thursday afternoon.
This is what they had to say about the governor's latest tax reform proposal.
"I lived in Houston for six years and they don't have a state income tax. It's very beneficial," said taxpayer Charles Chevalier. "I'm concerned on the impact it will have on lower income tax payers and residents of Louisiana who will pay then a larger share of their overall income," said taxpayer Audrey Stewart.
Governor Jindal's office issued this statement in response to his proposed tax reform plan:
"We are meeting with every legislator over the coming weeks to discuss the details of the tax reform plan. Our goal is to eliminate all personal income tax and all corporate income tax in a revenue neutral manner. We want to keep the sales tax as low and flat as possible.
"Eliminating personal income taxes will put more money back into the pockets of Louisiana families and will change a complex tax code into a more simple system that will make Louisiana more attractive to companies who want to invest here and create jobs.
"Tax reform will remove administrative burdens from families and small businesses and improve Louisiana's business prospects; create more business investment opportunities with increased job growth; and raise the state's profile in national business rankings.
"The bottom line is that for too long, Louisiana's workers and small businesses have suffered from having a state tax structure that is too complex and that holds back economic prosperity. It's time to change that so people can keep more of their own money and foster an environment where businesses want to invest and create good-paying jobs." - Gov. Bobby Jindal
The governor plans on working with state lawmakers on his tax reform package in the coming weeks. It would be presented during the legislative session, which begins on April 8.