Today, as part of the Pelican Institute’s “A Jobs and Opportunity Agenda for Louisiana,” the organization announced its partnership with NTUF to present solutions to reforming Louisiana’s complicated and outdated sales tax code in the wake of the U.S. Supreme Court’s (SCOTUS) decision in South Dakota v. Wayfair. This decision overturned a previous precedent that required a business to have some form of physical presence within a state to be held liable for sales tax collection and remittance responsibility in that state.
The new study analyzes the impact of the SCOTUS decision on Louisiana and its sales tax system. It also calls on lawmakers to comprehensively reform the state’s sales tax code, which is one of the most burdensome and complex in the country.
If Louisiana decides to impose its sales tax structure on out-of-state businesses without significant simplification of the tax system, the state will be at risk of costly litigation. The paper lays out a course that will allow the state to avoid legal jeopardy while improving the competitiveness of its business tax climate.
To do this, the Pelican Institute and NTUF recommend fiscally responsible, comprehensive changes to the sales tax structure as a better course for lawmakers than menial, quick-fix changes. The paper also spotlights problems with the Louisiana Sales and Use Tax Commission for Remote Sellers’, a body tasked with reforming the state’s sales tax code, plan to effectively create a separate system of taxation for remote and in-state retailers.
The Pelican Institute and NTUF say the proposal fails to meet the standards of sound public policy by creating a separate system of tax compliance for online sales and brick-and-mortar sales. Businesses with complex operations, such as a company with a brick-and-mortar presence in state and an out-of-state affiliate that makes sales into Louisiana, would face significant confusion as to which tax system applies to a given sale.
“Wayfair offers a chance for Louisiana lawmakers to finally address the state’s needlessly complex and out-of-date sales tax structure.”,” said Eric Peterson, director of public policy at the Pelican Institute. “Our state deserves a 21st century tax code that encourages growth and taxes individuals and businesses transparently and fairly. By simplifying the complex sales tax code for traditional brick-and-mortar transactions and online sales alike, we can unleash Louisiana’s potential and spark an economic revolution.”
NTUF and the Pelican Institute also added that any reform considered by lawmakers should be revenue-neutral to ensure that Louisianans don’t suffer from higher net tax burdens.
Click to view the full detailed solutions paper from the Pelican Institute for Public Policy (Pelican Institute) and the National Taxpayers Union Foundation (NTUF).