Government Watchdog Group Sees “Margin For Error” With Gov. Jindal’s Tax Swap Plan
Another government watchdog group has come out with their thoughts on Governor Jindal’s tax reform plan. The watchdogs question whether it should be fully implemented on January 1st, if passed by the Louisiana Legislature. The group also claims that the effects of this plan are not revenue neutral like the Governor’s office has proposed.
Last week, Public Affairs Research Council of Louisiana (PAR) President Robert Scott criticized Gov. Jindal’s tax swap proposal, saying “the way they set it up…there is still about $500 million to $650 million short of making it revenue neutral.” This was in reference to Gov. Jindal’s team using revenue numbers from 2011, according to Scott.
Louisiana Department of Revenue Secretary Tim Barfield, Jindal’s point man on his tax proposal, responded by saying PAR’s analysis is “based on flawed assumptions…and does not take into account all the data used by the Louisiana Department of Revenue.” Barfield says they are using the 2011 Fiscal Year data as a “starting point.”
Now, Council For A Better Louisiana (CABL) President Barry Erwin is expressing his group’s concerns. Erwin says there’s a chance the tax reform plan will not bring in the anticipated revenues the governor is counting on:
Things happen, and if revenues don't meet expectations we could find ourselves with another whole round of large budget cuts, that in some cases, might be self-inflicted. We just don't think that's a good idea and we think we need a safety valve.
CABL believes Gov. Jindal’s tax plan should be phased-in, so the state can prevent future budget deficits. Erwin says if Jindal’s proposal passes the legislature in the Spring, eliminating income taxes in exchange for higher sales and tobacco sales, that it’ll be difficult to begin on January 1st:
There's going to be a lot of complexity to this plan and a lot of questions that businesses, and probably individuals too, are going to have about 'Do they have to collect sales taxes?' 'Do they have to pay sales taxes?' There's just a lot of margin for error.
Erwin says the Tax Foundation has suggested the tax plan should start by enacting the higher sales taxes while beginning to phase out income taxes:
But you can see over a period of a couple of years how you're sales tax revenues are coming in, if you need to make adjustments, that type of thing. Eventually, you could go ahead and continue to phase out the income tax or see if you have to make some other mid-course corrections.
We have reached out to the Jindal administration concerning Erwin's comments and are still awaiting a response.