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Feeding the Tax Base

When the Sales Tax Streamlining Commission met Monday, they considered doing away with the state sales tax exemption on food purchased for home consumption.

“This would be a revenue neutral thing,” commission chair Julie Stokes told the group. “Food would be fully taxed, and the rate on everything would be able to come down a half of a penny.”

Jay Campbell, who represents the Public Affairs Research Council on the panel, supported the idea even though it will hit lower income residents hardest.

“When the argument is about lower income people being adversely affected, most lower income people are receiving SNAP benefits, which are automatically not subject to any sales tax,” he declared.

But Louisiana Revenue Secretary Kimberly Robinson objected – to Campbell’s statement and to the regressive nature of such a move.

“SNAP benefits do not cover all of the population,” she advised, “And we are significantly raising sales tax from zero on the state level for those individuals that do not receive SNAP.”

Mark West, representing the Louisiana Association of Tax Administrators, pointed out, “This is going to be a significant increase in tax for people who can’t afford to eat at restaurants, who work and have to get their food in the grocery store.”

Only seven states in the nation tax food. Louisiana’s exemption, which cost the state $428-million dollars in Fiscal Year 2015, was implemented in 2002 as part of the Stelly Plan and is constitutionally protected. It would require another constitutional amendment to make it go away. Dawn Starnes with the National Federation of Independent Businesses had questions about the viability of putting it on the ballot.

“The governor’s not going to support it; so who is?” Starnes asked. “Who’s going to go and explain to the people of this state what they’re voting on?”

But Stokes, a Kenner Republican who is eyeing a run for State Treasurer, views the proposal as a positive.

“You could perceive it as allowing the people of this state to decide whether they’d rather have a half a cent lower sales tax and broaden the base, or whether they wish to keep the higher sales tax rate,” Stokes said. “So I think we’re empowering the people of this state.”

In the end, the commission voted 9 to 7 to recommend the change.