An aerial view of the Louisiana State Capitol. (Wes Muller/Louisiana Illuminator)
A bill that would expand the state sales tax to apply to labor and services was sidelined in the Louisiana House of Representatives again on Monday, though its author said he intends to cut the list of items it will cover by more than half.
House Bill 9 remained stalled for the third day in a row in a special legislative session that must end by 6 p.m. next Monday. Its prospects grow more tenuous with the approval of two Senate committees and the full chamber still ahead once it clears the House.
The proposal’s sponsor, Rep. Neil Riser, R-Columbia, elected not to bring it up for a House floor vote Monday but did tell his colleagues about some changes he wants to make to his legislation.
In its initial form, the measure would have expanded the state sales tax to apply to more than 40 services, including lawn care, massage therapy and various home repair offerings. A significant number of lawmakers from both sides of the aisle have expressed reluctance over taxing services and labor.
Some fear the sales tax expansion will land hardest on lower income residents. Others are concerned with the cost and logistical burden placed on small businesses and sole proprietors to collect and remit taxes.
But perhaps most concerning is the potential that adding taxes to home repair services would increase property insurance rates, according to testimony from insurance industry executives last week in a House Ways & Means Committee hearing.
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Riser took to the floor Monday to announce he had filed an amendment to his bill that would cull the list of services to 19. Among those removed are property construction, repair services, warranty agreements, tow truck and wrecker services, waste collection and others.
Riser also pointed out it would likewise reduce the amount of tax revenue that could be generated from an estimated $500 million per year to $130 million.
The bill is part of a package Republican Gov. Jeff Landry proposed offering lower personal and business income taxes in exchange for more sales taxes and fewer tax credits. Supporters of the plan maintain its measures would bring more business and jobs to the state.
If Riser’s sales tax bill fails to pass while the rest of the package succeeds, it could leave a sizable deficit in the state budget. Riser said he has not yet heard any viable proposals to offset such a loss.
His bill is the only measure remaining on the House floor calendar, scheduled for a floor vote again on Tuesday. Right now, it’s unclear if it has the required two-thirds support from members required for approval.
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