BATON ROUGE, La. (AP) -- The consulting firm hired by Gov. Bobby Jindal's administration for economic analysis of the governor's tax plan says states should not enact a key plank of Jindal's proposal.
In a report released nationally, Ernst & Young economists say sales taxes on services bought by businesses are bad ideas because companies pass those costs to customers or shrink activity in a state where such taxes are levied.
A new 6.25 percent sales tax on services is one of the main ways Jindal proposes to offset the loss of state income tax revenue in his tax restructuring proposal.
Ernst & Young has been doing tax modeling for the Jindal administration. Its criticism was included in an unrelated report for the nonprofit Council on State Taxation.