Louisiana lawmakers advance sales tax extension, approve medical marijuana expansion
(The Center Square) – The Louisiana Senate Finance Committee kept alive Wednesday an effort to make permanent a sales tax set to expire in 2025 and dedicate the money to road and bridge construction.
The change could raise nearly $400 million annually for infrastructure while keeping Louisiana’s combined state and local sales tax rate among the nation’s highest. Lawmakers established the 0.45% sales tax in 2018 to stabilize the state’s budget with the stipulation it would roll off automatically.
Sen. Rick Ward, R-Port Allen, authored the unrelated amendment to House Bill 514 to extend and rededicate the tax. The bill’s original purpose, which remains included, is to establish taxes on smokeable medical marijuana, which legislators voted to legalize Wednesday.
“We’ve lived up to our commitment ahead of schedule,” Ward said about the original purpose of the temporary tax. “Now we need a new commitment.”
Ward said state officials need to learn not to rely on the tax for general spending. He said extending the tax is a more politically realistic way to address the state’s ailing infrastructure than raising the gas tax, which hasn’t been touched in three decades.
Ward’s amendment also would reduce the sales tax on manufacturing utilities from 2% to 1%, but it would extend partially that 1% tax past its scheduled expiration into 2032. Louisiana is the only state in the southeast that taxes manufacturing utilities, according to Tyler Gray with the Louisiana Mid-Continent Oil and Gas Association.
Sen. Cameron Henry, R-Metairie, said he was concerned about Louisiana’s high average sales tax, which is second only to Tennessee’s. He also said he didn’t want to tie the hands of the next Legislature, especially since current lawmakers could choose to bond out the expected new infrastructure revenue stream.
Speakers and lawmakers also noted sales taxes are inherently regressive, meaning that they cost lower-income consumers a larger share of their pay than higher-income residents. A higher gas tax might be a better alternative, some opponents suggested.
Ward’s argument that Louisiana needs a new future revenue stream for road and bridge construction and maintenance won out, and the committee sent the amended bill to the Senate floor with a 7-4 vote, with Republicans and Democrats voting on both sides. If it passes the Senate, it could face a stiff climb in the House, where enough conservatives have expressed opposition to block the bill from getting the two-thirds supermajority needed to raise taxes.
HB 514 would establish taxes on medical marijuana in the form of the raw plant, which is not part of the state’s medical program under current law. While Senate Finance was debating the bill, the House was agreeing to Senate amendments to House Bill 391, which legalizes smoking marijuana with a doctor’s recommendation.
HB 391 now heads to Gov. John Bel Edwards’ desk.
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