Lawmakers approved a tax bill last week to decrease Louisiana’s overall sales tax percentage rate.
The current 5 percent overall sales tax rate will drop to 4.45 percent beginning Sunday, July 1 when the new bill takes effect.
House Bill 10 will enact the new rate in which .45 percent of sales tax will replace the current 1 percent.
The new tax rate will remain in place for seven years, ending in 2025. This is a change from the intermittent budget fixes Louisiana has had over the past years.
These patchwork-like fixes are a result of the financial crisis the state was left with in the wake of former Gov. Bobby Jindal’s tenure.
Many lawmakers see this change as a mark of stability with a rather rocky legislature. “The fiscal cliff is now gone and we have predictability ahead of us,” Governor John Bel Edwards said.
Daniel Erspamer CEO of the Pelican Institute for Public Policy is not as
enthusiastic. “It's tough to watch our elected officials continue to choose the broken status quo rather than embrace the opportunity to truly stand up for our state's working families,” he said.
Erspamer hopes this is a wake-up call for the fundamental changes needed to bring jobs and opportunity back to Louisiana."
This new tax bill will raise an estimated $463 million for the budget that starts in July and about $500 million annually after that," he said.
The ongoing budget crisis has been at the forefront of Legislative discussions since Edwards took over.
It has caused him to call seven special sessions of the state’s legislature since 2016.
The state’s shaky finances have raised concerns for higher education in Louisiana, the TOPS program and many other state-run programs.
The new House Bill works to offer some security to these programs.