New taxes go in effect on April 1st; that's no joke
BATON ROUGE - Smokers, drinkers, car renters and every shopper around Louisiana will be paying more for their purchases starting today.
In addition to tax increases on cigarettes, alcohol and car rentals, a one percent increase in the state sales tax kicks in Friday.
According to the Tax Foundation, the sales tax increase will push Louisiana’s average state and local tax to more than 10 percent, the highest in the nation.
Also, some items that are usually tax free will temporarily lose their exemptions.
Pam Robertson, the owner of Pam’s Capitol Corner Market in Baton Rouge says the tax hike will hurt her profits.
“I have to sell six cartons in order to buy one carton clear,” Robertson said.
The increase in cigarette taxes is expected to generate $46 million a year to help the state reduce its budget deficit. Even though Louisiana’s $1.08 tax is still less than the average state tax across the country, smokers are not happy with that cost being passed to them.
Laura Borgelon, a smoker for 35 years, said the tax increase is going to put a strain on anyone who smokes.
Lawmakers upped taxes in a special session in February to balance the state’s budget. Lawmakers estimated that the budget was almost $1 billion short for the current fiscal year and nearly $2 billion short for next year.
The new taxes are estimated to raise $300 million by June 30 – and much more for next year’s budget.
Here’s a breakdown of the taxes that go in effect on April 1:
- Increasing the state sales tax from four cents to five cents; the extra penny remains in effect until June 30, 2018, in most cases, but expires on July 1, 2016, for manufacturing equipment and machinery
- Most current exemptions and exclusions on the 4 percent state sales tax are eliminated; all exclusions will be restored by July 1, 2018
- An automobile rental tax, which had expired, is reinstated on gross proceeds at the rate of 2.5 percent (state) and 0.5 percent (local)
- A hotel tax, with revenue flowing to local governments, is expanded to include residential locations such as houses, apartments and condominiums
- Sales made in Louisiana by dealers outside the state (such as over the Internet) are subject to the collection and remittance of sales and use tax
- The excise tax on cigarettes increases to $1.08
The excise tax on alcoholic beverages increases to:
- Liquor - $0.80 per liter
- Sparkling wine - $0.55 per liter
- Still wines with 14-24 percent alcoholic volume - $0.35 per liter
- Still wines with more than 24 percent alcoholic volume - $0.55 per liter
- Malt beverages - $12.50 per barrel
- Low alcoholic content beverages - $12.50 per barrel