State Tax Update Archive
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Gov. Foster (R-LA) proposes Value Added Tax

On May 18, 2000 the House Ways and Means Committee of the Louisiana state legislature passed Governor Foster's proposed 1.85% tax on business (VAT) with a vote of 14-4.  Although it passed committee easily, there is a great deal of speculation as to whether the full House would pass it.  Louisiana has a supermajority rule for tax increases and supporters for the bill feel that there isn't even 35 votes for this bill (it needs 70 to pass the house.)

This plan would levy a 1.85% value-added tax on businesses with gross receipts over $500,000 a year that would raise $1.72 billion a year.  The tax base would include adjusted gross revenue, wages, salaries, rents and leases and some other expenses.  It would net $755 million a year earmarked for education aka teachers raises.

It would also:

·          Repeal a 3 cent sales tax on food and utilities to save taxpayers $330 million a year.

·          Eliminate $480 million in corporate income and franchise taxes.

·          Eliminate $100 million in premium taxes on insurance companies.

·          Give banks a credit against their value-added taxes for local taxes paid on bank stock, up to $55 million a year.

Business taxes would rise by $941 million some of the lowlights include:

Foster claims that there are too many businesses in Louisiana avoiding corporate taxes and this will just close the loophole.  What he does not want anyone to know is that these business tax increases will likely be passed on to the consumer.

One member stated that several committee members voted with the governor, but they will probably vote against it on the floor. 

New York announces $150 million tax cut

Governor George Pataki (R-NY), Senate Majority Leader Joseph L. Bruno (R) and Assembly Speaker Sheldon Silver (D) announced that the 2000-2001 State Budget will include the elimination of the sales tax on the transmission and delivery of gas and electricity, providing a $150 million in tax cuts to energy customers across New York.  The tax cut will be phased-in over a four- year period beginning September 1, 2000.

This cut added to the already passed $2.3 billion in cuts and the expected phase in of additional tax cuts will put the state on track to cut $6.8 billion by 2005.

"Lowering energy taxes to cut the cost of energy and make New York more competitive for business has been a top priority of the Senate Majority," Senator Bruno said.

Christmas comes early in Iowa

Iowa governor Tom Vilsack (D) signed in to law a tax cut package worth nearly $10 million.

The proposal passed by a Republican controlled General Assembly includes a two-day sales tax "holiday" for Iowans making back to school purchases of clothes and shoes next August.

In addition to the estimated $3 million sales-tax holiday legislators approved tax credits for research and development business costs, increased income-tax pension exclusion from $5,000 to $6,000 for single filers and from $10,000 to $12,000 for married couples.  Finally the tax cut provides a tax credit of up to 10 percent for businesses that invest in value-added agriculture.