Louisianans pay the highest average sales taxes in the country, according to an annual study from the Tax Foundation.
The state rate is 5 percent, the average local rate is 4.98 percent, and the combined average rate of 9.98 percent topped all other states. Neighboring state Arkansas ranked only slightly better at no. 3 (9.30 percent average sales tax rate), but Mississippi came in at no. 20 (7.07 percent) and Texas ranked no. 12 (8.19 percent).
This dubious distinction comes after Gov. Edwards and the Louisiana Legislature passed temporary sales tax hikes in March 2016 to avoid higher education and hospital funding cuts with a $900 million budget deficit looming. The one-cent hike expires June 30, 2018.
Joe Henchman, the Tax Foundation’s vice president for state projects, told WWL.com that the complexity of the state’s sales tax system also comes into play: “There is a lot of criticism, not just of how high the rate is, but also how it’s structured. Very complex structure on the sales tax in Louisiana. Different rules for the state and local and a lot of complexity.”
So, it’s a small piece of good news that Gov. Edwards announced he will not propose any new taxes or fees to bridge the state’s midyear budget gap of $304 million. However, legislators may propose new fees if they wish. Discussions to finalize the plan for fixing the budget deficit will take place during a special session called by the governor for Feb. 13 through Feb. 23. State law requires that the budget gap be closed by Feb. 27.