Daily World (LA): Analyst says tax holiday not prudent
media mentionAugust 5, 2011
BATON ROUGE — State officials say the sales tax holiday today and Saturday only costs the state $3.7 million, but the director of the Louisiana Budget Project says that money has to come from somewhere.
Louisiana’s sales tax holiday Friday and Saturday is one of the most generous in the nation, said LBP director Edwards Ashworth in a news release.
“A sales tax holiday is ill-timed and irresponsible at a time when our leaders are making significant cuts to critical services,” Ashworth said. “This is just one more giveaway that contributes to Louisiana’s fiscal crisis, jeopardizing funding for education, health care, and infrastructure.”
The $3.7 million in revenue lost will ultimately have to be offset elsewhere in the budget, either through spending cuts or higher taxes, the LBP director said.
He recommends that Louisiana follow the example of Georgia and suspend such holidays.
“Though not politically popular, this would be a prudent step in Louisiana’s fiscal future,” Ashworth said.
Ashworth cites a policy brief by the Institute on Taxation and Economic Policy, a non-partisan research organization, which says sales tax holidays put a strain on states’ budgets and are too temporary to significantly change the regressive nature of a state’s tax structure.
Over the past decade, a growing number of states have been offering similar breaks to families with children before the school year begins.
But Louisiana’s tax holiday is much broader, exempting from state sales taxes the first $2,500 of consumer goods purchased for personal use.
Proponents exaggerate the benefits of sales tax holidays for working families, he says. Unlike wealthier families, low-income families do not have the luxury of shifting the timing of their purchases to coincide with a sales tax holiday.