Louisiana voters will decide the fate of a Constitutional amendment designed to simplify a complicated state sales tax collection system on October 9.
House Speaker Clay Schexnayder stumped in favor of the amendment at Vidalia Riverfront Convention Center August 27. Approximately 30 people were in attendance.
If passed, the amendment would create a State and Local Streamlined Sales and Use Tax Commission to “provide for the streamlined electronic filing, electronic remittance and the collection of sales and use taxes levied within the state,” according to the bill.
After its first year, the commission would replace both the Uniform Local Sales Tax Board and Tax Commission for Remote Sellers. The commission would also issue policy advice and develop rules and regulations to simplify and streamline the audit process for taxpayers.
“We are trying to create a portal that would allow tax dollars to be submitted into a portal and that portal will distribute the dollars back out to the parishes,” Schexnayder said.
The commission would be made up of local and state governmental officials representing Louisiana Sheriff’s Association, School Board Association, Municipal Association, governor, Department of Revenue, Senate president and Speaker of the House representatives.
The commission’s origin came from Louisiana’s complicated tax code. The Bayou State ranks 49th in terms of how it collects taxes due to the many local tax collectors, according to Schexnayder. There are 54 collectors for Louisiana’s 64 parishes, among them are more than 100 different local tax rates.
“The current system is archaic and cumbersome and puts our home-grown businesses at a disadvantage,” Schexnayder said.
Schexnayder said local businesses would have the same footing as retail giants like Wayfair.
In 2018’s South Dakota v. Wayfair, Inc., the U.S. Supreme Court said states could collect taxes on remote sales. Previously, states could only collect tax on transactions with businesses maintaining a physical presence in the state. Since the verdict, many states have passed their own legislation establishing an economic nexus, or a taxable threshold on online sales.
The U.S. Supreme Court may have added urgency to the debate with its Wayfair decision, which cleared the way for states to charge sales tax on internet sales by out-of-state companies, but said states placing an “undue burden” on interstate commerce could run afoul of the U.S. Constitution with a complex tax collection.
“(The commission) makes it simpler,” Schexnayder said. “Some retailers think the complexity of (Louisiana) sales collection is unconstitutional. The current system would not hold up under law and it could be challenged.”
Local government officials traditionally have opposed setting up a single collector like most other states have done. Local governments fear they would not get the money they need to provide services on a timely basis and said collecting their own taxes was the best way to ensure money was spent the way local taxpayers and voters wanted it spent.
But Schexnayder said with the commission, local governments would receive its sales tax money in a correct and timely manner.
He gave the example of Mississippi who has a similar tax collection method. According to Schexnayder, the neighboring state collected an additional $400 million in sales tax.
“The problem we are having is the internet tax collection coming out of state,” Schexnayder said. “We are not capturing all of those dollars our tax payers are paying.”
The meeting was sponsored by District 32 Sen. Glen Womack. Womack also organized a similar August 27 meeting in LaSalle Parish and will hold another meeting September 20 in Franklin Parish.