By MELINDA DESLATTE / Associated Press
BATON ROUGE, La. (AP) -- Gov. Bobby Jindal on Thursday proposed a hefty jump in the state's sales tax rate and $1 billion in new taxes charged on services to help offset the cost of his push to eliminate Louisiana's income taxes.
The Republican governor and his leader on the tax code revamp, Tim Barfield, outlined the first specifics of Jindal's proposal to rewrite Louisiana's tax code.
Jindal wants to boost state sales taxes from 4 percent to 5.88 percent; increase cigarette taxes from 36 cents per pack to $1.41; and assess sales taxes on a wide range of services not currently taxed.
He also wants to remove an unspecified list of tax breaks, shrink the number of tax exemptions for the oil and gas industry, and limit the state's economic development incentives for the film industry.
In exchange, the plan would do away with the state's individual income tax and the state's corporate income and franchise taxes, which bring in about $3 billion a year.
"We think the next big step to bringing our kids back and growing the state economy is getting rid of the income taxes," Jindal told the House and Senate tax-writing committees, in a rare appearance at a legislative hearing.
Jindal wants the tax code rewrite to keep the state's overall tax collections at the same amount that would have been received without the changes -- what the governor calls "revenue neutral."
Lawmakers will consider the ideas in the legislative session that begins April 8. Initial reviews from committee members were skeptical, with Republicans and Democrats questioning the need for the overhaul, rather than smaller tweaks to the tax code.
"I hope you can make me comfortable because I'm uncomfortable now," Sen. Bob Kostelka, R-Monroe, told Barfield.
Jindal said his goal is to get rid of the income taxes. He told lawmakers he's flexible on how to do that if lawmakers want to tweak parts of his plan.
"We are not presenting to you today a plan etched in stone," the governor said. "There are a lot of different ways to get to our end point, which is a better tax code for the people of Louisiana."
Some of the changes in the Jindal administration's proposed rewrite of the state tax code, as outlined to lawmakers on Thursday:
• INCOME TAXES: Would eliminate Louisiana's personal income tax and corporate income and franchise taxes.
• SALES TAXES: Would increase Louisiana's state sales tax rate from 4 percent to 5.88 percent, which would boost Louisiana's combined local and state sales tax rate average to 10.75 percent, the highest in the country. State sales taxes would be charged on a new list of services not currently taxed, like haircuts, landscaping, cable TV, pet grooming, tanning salon visits, agricultural services and data services.
Exempt would be health care, education, construction, real estate, financial services, advertising purchases, legal services, oil and gas services and funerals. Also, there would be rebate programs for low-income households and for retirees with less than $60,000 adjusted gross income to help offset the increased sales tax costs.
• TOBACCO TAXES: Would increase cigarette taxes from 36 cents per pack to $1.41 per pack and would raise variable rates for other tobacco products to 68 percent of the manufacturer's price.
• TAX BREAKS: Would eliminate more than 200 tax breaks, including 130 income tax breaks that would disappear with the removal of the income taxes.
• ECONOMIC DEVELOPMENT INCENTIVES: Would maintain economic development incentive programs, but would make tweaks to limit the film tax break program.