Analysis: Defeat Won’t End Los Angeles Sales Tax Collection Debate

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BATON ROUGE, Louisiana (AP) – Voters in Louisiana may have rejected a constitutional amendment to begin centralizing state sales tax collections, but that doesn’t mean lawmakers and outside groups give up trying to make the change.

A coalition of right-wing organizations and an Arizona-based company that sells jewelry making supplies have filed a lawsuit in federal court, challenging the current method of patchwork of various local government agencies collecting sales taxes.

Republican legislative leaders are examining the possibility of reintroducing the legislation for another trial at the polls. House Speaker Clay Schexnayder said Legislative Assembly staff were looking at whether lawmakers could re-pass the proposal in the 2022 regular legislative session or whether they would have to wait until the 2023 session in because of the limitations on when tax invoices can be reviewed.

“It’s something that I believe helps our state, helps us move forward, so we’re going to keep pushing it,” said Schexnayder, a Gonzales Republican who sponsored the failed amendment. “We’re not going to give it up. We just have to find a way.

Meanwhile, it is unclear whether there will be any fallout between the legislative branch and New Orleans Mayor LaToya Cantrell, who helped sink the constitutional amendment.

Lawmakers have proposed streamlining the sales tax collection process through an eight-member commission, rather than through the more than 50 local government agencies ranging from sheriffs and mayors to school boards that currently conduct work. Constitutional change – a goal long sought by business groups – was passed by the Legislature with the unanimous backing of Republicans and Democrats and the backing of Democratic Governor John Bel Edwards.

But voters this month rejected the proposal. Uncertified results from the secretary of state’s office show that 52% of those who voted in the low-turnout election opposed the change.

Houma’s representative Tanner Magee, the second Republican House leader, said the tight vote – with around 15,000 more people voting against the amendment than for this one – shows the passage is worth it. be tried again. He suggested that more education could improve the chances of the proposal in a future election.

“I think there is definitely a base there to build on. I wasn’t really discouraged, ”Magee said.

Advocates of centralization claim Louisiana is one of only three states to handle the collection of sales taxes through a mishmash of local government agencies. They argue that it is too cumbersome for businesses to navigate the complex process of filing and remitting taxes.

Critics of the constitutional amendment have pointed to uncertainty over the details of how the sales tax commission works, as lawmakers have yet to draft specific regulations. They also argued that it could block sales tax collections in the state bureaucracy.

Cantrell did not publicly oppose the centralization effort during his time in the legislature. But she spoke out firmly in the opposition ahead of the election, arguing that the commission could withhold sales taxes owed to municipalities when state officials are dissatisfied with local decisions. She called it a “state takeover.”

The New Orleans mayor’s opposition followed the August decision of the Bond Commission – which includes legislative leaders and elected officials from across the state – to temporarily block millions for state building work around New Orleans, at least in part due to the city’s response to the coronavirus.

The Bond Commission approved the financing a month later. But that delay was part of the reason Cantrell opposed the sales tax centralization effort, according to spokesperson Beau Tidwell.

“It wasn’t a blow to tat, but it really highlighted to us why it was such a concern,” Tidwell said. “It was a really big red flag about what could happen.”

Construction dollars temporarily withheld by the Bond Commission are discretionary, however. Sales tax dollars are not. Lawmakers note this distinction.

“We don’t owe you a project at the Bond Commission,” Magee said. “Sales tax money is very different. “

Tidwell said Cantrell was also concerned that lawmakers did not pass legislation clarifying how the sales tax commission works. “It was so nebulous,” Tidwell said.

Just days after voters rejected the constitutional amendment, some groups pushing for the adoption wasted no time with a different approach, filing a lawsuit in federal court in New Orleans that seeks to overturn the current system of tax collection as unconstitutional.

The lawsuit could complicate legislative efforts to revisit the constitutional amendment proposal if it is successful and a judge decides how the state should collect sales taxes, Schexnayder said.

“The lawsuit that has been filed puts us and the people in a very bad position,” he said.

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EDITOR’S NOTE: Melinda Deslatte has covered Louisiana politics for The Associated Press since 2000. Follow her on http://twitter.com/melindadeslatte.

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