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Simplifying Louisiana's Internet Sales Tax

Wallis Watkins

According to the DC-based Tax Foundation, Louisiana’s sales tax structure is the worst in the nation. On Wednesday, The Sales Tax Streamlining and Modernization Commission looked at ways to make collecting internet sales tax easier. 

Craig Johnson is the Executive Director of the Streamlined Sales Tax Governing Board. He says the playing field isn’t level between brick and mortar shops and online retailers. “Tax shouldn’t be in the equation when someone is deciding what they should or not purchase," he says. 

But it's hard to capture sales tax on items purchased online. When you purchase a product from an out-of-state company, Louisiana charges a use tax. The problem is that the tax is self-reported in your state income tax return. And very few people actually pay it, which leaves a lot of revenue left on the table that the state doesn't collect, says Johnson. 

The United States Senate successfully passed the Marketplace Fairness Act in 2013, which would require online retailers to collect sales tax at the time of transaction.

At a Governor’s Forum held by the Baton Rouge Press Club, Gubernatorial Candidate John ‘Bel’ Edwards urged Congress to pass the Act. "This is about fairness," he says. "We shouldn’t put Louisiana brick and mortar retailers at a competitive disadvantage of nine to ten percent to out-of-state catalogue and internet sales. That just doesn’t make sense for us. It’s not fair and we have to do better," says Edwards.

Senator David Vitter voted against the bill in the Senate in 2013. Johnson says that internet sales tax should not be thought of as a tax increase, because it's "already legally due and owing. Most purchasers don’t realize that they owe that use tax," says Johnson.

If Louisiana can simplify the way it collects internet sales tax, that could put more more money on the table. “A number of states," he says, "are using it to reduce taxes in other areas. Others are using it to plug budget holes.”