Recall that Jindal has not tried to sell the effort, essentially
swapping sales for income taxes, as a way to boost immediately the state’s take
from the people, but as a simplification device that will reduce the amount of
compliance and procedural costs to allow increased investment and to encourage additional
commitments to invest in state commerce. And there may be no area so rife with
inefficiency in administration than with sales taxes.
Louisiana is just one of four states (of which one, Arizona, collects
for most entities at the state level) where local taxes are levied, collected,
audited, and adjudicated at the local level. This means, for example, that for
a retail operation doing business in every parish of the state, 64 different
protocols must be followed with 64 separate remittances on a frequent basis
must be produced and delivered – in addition to the separate state levy.
The lack of standardization can be maddening. Besides having to cut so
many different payments, procedures to set up business, handle certain
transactions, and close business differ among jurisdictions. For example,
from each and every of the local collectors, which technically is the sheriff,
a retailer must find out what exemptions exist, whether resale certificates
serve as proof of an exempt transaction, and which particular state Department
of Revenue rulings are observed.
The Jindal Administration has floated one simplification idea in this
area, to have a dedicated
state tax court, as is the case in 18 states presently that would take tax
disputes regardless of from where in the state. Currently, a dispute begins in
a state district court. Local governments that perceive their district courts
tend to rule in their favor may resist this idea, but surely cost savings would
result by unclogging district courts of these cases, and the simplification
would appeal to retailers across districts.
But it needs to go beyond just that by proposing the centralized
collection and processing of all sales taxes, following the model practiced by
almost every other state. This way, payments go to just one place, which also
would serve as a repository of information about different rates and
exemptions, and also could create standardized revenue rulings followed
statewide. Not only should this reduce dramatically compliance costs, but also it
probably would do a better job of preventing leakage of uncollected tax
revenues that might slip through the cracks with such an uncoordinated system
as at present.
Naturally, whenever power shifts away from political entities that may
raise opposition from them, in this case the sheriffs. But the experience of
other states shows many tax-related duties from which the agencies or those
like them that exhibit power, and perhaps even draw in revenues, can remain in
the hands of sheriff’s departments. For example, tax delinquency sales for
local jurisdictions still could be performed by sheriffs. With a reform structured
that way, sheriffs should not put up more potential opposition than would
override the obvious benefits of centralization.
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