A funny thing happened on the long and torturous way to securing the budget deal that mercifully ended Louisiana’s third special legislative session of the year in June: No one included the state’s three tax holidays among exemptions to the .45 percent seven-year extension of the expiring 1 percent state sales tax.
Therefore, there was no “Back To School” sales tax holiday on the first Friday and Saturday in August – which would have begun August 3 – much to many’s surprise. Nor will there be a hurricane preparedness sales tax holiday on the last Saturday and Sunday of next May.
Unless legislators remedy the oversight, these two state sales tax holidays are a thing of the past until, at least, 2025.
There will, however, continue to be a partial Second Amendment sales tax holiday on the first Fridays through Sundays of September – this year, Sept. 7-9 – because local governments are still required to participate.
The Louisiana Uniform Local Sales Tax Board recently confirmed that local governments must still recognize the Second Amendment sales tax holiday, noting that the wording in the 2009 state law that created it specifically requires municipal participation and remains in vogue at the local level.
What that means … customers pay the state 4.45 percent sales tax, but not the 2-3 cent local sales tax.
The first public inkling that legislators had eliminated the sales tax holidays came in a July bulletin from Louisiana Revenue Secretary Kimberly Lewis Robinson entitled, “Cessation of State Sales Tax Holidays Beginning July 1, 2018 through June 30, 2025.”
Robinson explained in the bulletin that the holidays were not on the “list of approved exemptions and exclusions from the 4.45 percent state sales tax” and, therefore, “items of tangible personal property purchased during the sales tax holiday periods will be subject to the full state sales tax rate of 4.45% through June 30, 2025.”
In her interpretation, the budget offered no insight into local participation in tax holidays. “As such,” Robinson wrote, “the local sales tax exemptions in place for the Louisiana Second Amendment Weekend Sales Tax Holiday will not be impacted.”
The Louisiana Uniform Local Sales Tax Board has reaffirmed that view and is instructing local governments to observe the Second Amendment tax holiday.
According to the Louisiana Municipal Association, the annual Second Amendment tax holiday in early September generally generates about $500,000 in sales tax savings on purchases of firearms, ammunition and hunting supplies for consumers that would otherwise go to local governments, school boards and other taxing authorities.
According to the Public Affairs Research Council of Louisiana (PARC), the confusion on the part of legislators in adopting such a budget without realizing its impact on local government and on the part of municipalities trying to adhere to it is uniquely systemic to Louisiana.
PARC, noting that Louisiana separates its state and local taxing systems more extensively than any other state in a “too complicated” taxing scheme, has long supported uniform tax collections.
The tax holiday confusion is another example of how “the state’s sales tax system is riddled with laws that dictate different amounts, different applications depending on the taxing jurisdiction,” PARC maintains.