Business owners say more taxes may push sales out of state
Steady traffic entered the door at Hartman’s True Value Hardware in Boutte, but owner Charlie Hartman is concerned the state’s numerous tax increases that took effect April 1 could hurt business.
“I think my business will be right along with everyone else’s – it is going to slow down, and eventually it will put some people out of business,” Hartman said of tax hikes that include a temporary sales tax hike from four to five cents. “How do they expect us to survive in business? Now Louisiana isn’t a friendly place to do business.”
Hartman pointed to the tax hikes combined with a possible minimum wage hike to $8.75 an hour as posing a breaking point for businesses. And he isn’t alone in his concerns about the direction the state is taking businesses, as well as citizens.
“If they continue to tax us and continue to raise taxes there won’t be much sense in people working because they’ll pay everything they earn in taxes,” he said. “You’re making a lot of taxes; you ain’t making a lot of money.”
Numerous changes to Louisiana tax laws that passed during the Legislature’s extraordinary session aimed at bailing the state out of a $900 million shortfall, the first of other bailouts expected – kicked in April 1.
The penny sales tax hike is scheduled to expire June 30, 2018 in most cases while it expires July 1 on manufacturing equipment and machinery.
Additionally, an automobile rental tax (2.5 percent state and 0.5 percent local) has been reinstated; a hotel tax was expanded to include residential locations such as houses, apartments and condominiums; an Internet tax will be enforced; excise taxes were increased on cigarettes and alcohol.
At Destrehan’s Seafood Pot, Erik Donnaud said he doesn’t expect the added tax to hurt his crawfish business in the busy season.
“I don’t see it hurting us really … nothing we can do about it,” said Donnaud, although he added that he believes Louisianans pay enough taxes already. “Seafood is a local thing. I don’t see them finding what we have in other states.”
Although he hasn’t gotten any feedback from customers, Donnaud isn’t sure how added taxes could affect his business in the off season.
As a longtime local retailer, Hartman questioned the state Legislature’s logic with bombarding the people with taxes instead of cutting programs.
“I think it will hurt the state more than it helps them because they won’t collect it if sales slow down,” he said. “What are they gaining? They raise the tax a penny and they make people buy less stuff. I think they will find a lot of people leave the state to do their shopping. Mississippi is not that far away, you know.”
Hartman suggested this first wave of tax hikes – and more are likely as legislators maintain the state’s budget will only deepen next fiscal year – could drive more people into seeking state aid rather than a job.
Part of the problem, he maintained, is the state not diversifying the economy as has been discussed for years in Louisiana.
Barry Majoria, of Majoria’s Supermarket, also in Boutte, agreed that state officials’ failure to diversify the economy to avoid relying mainly on the oil and gas industry for tax revenue is partly to blame for state budgeting being so dire.
“Legislators took the easy way out with tax hikes rather than cutting programs,” Majoria said. “I can’t raise revenue with a vote or a stroke of a pen. It just doesn’t happen. I have to cut spending. I don’t get a bailout from the government.”
Overall, he expects the tax hikes to hurt sales, although he doesn’t believe they will stop smokers and drinkers from buying cigarettes and alcohol. But Majoria called it an unfair burden to place on them.
Majoria said he doesn’t expect the temporary sales tax hike to remain temporary.
“When has the last hike ever been temporary?” he said. “I think that’s a sales pitch. I don’t know of any that were temporary. They may say that, but when it comes to rescinding it that’s not what happens.”
“If the state is in that bad a shape, let’s look at some salary reductions and let’s start with the governor and legislators. Somebody needs to cut some place, but all I’ve seen is taxes,” he said.
The Boutte businessman said legislators should have listened more to state Treasurer John Kennedy, who advocated cutting programs and consulting contracts over tax hikes.
Kurt Steven, St. Charles Parish representative to the Libertarians’ Louisiana central committee, strongly agreed with Hartman calling state government bloated with 21 departments and over 100 agencies in those departments.
“The state never cuts anything. They never give up taxes, he said. “They turned to the people, you and me, to pay for it. We lose tax revenue because the price of oil dropped, but the tax revenues are bust so they turn to the work people – hitting us when we work and hitting us when we spend it. Smokers are felling it. They kill the goose with the golden egg with the tobacco tax.”
These days, Steven said the running slogan in his circles is, “Taxation is theft.”
Hartman said he expects the state’s budget crunch will get worse.
“All this stuff they’re doing is going to drive people out of the state,” he said. “The more people leave the state, the less sales tax the state will collect. When you get enough people to leave, it doesn’t matter how much your sales tax is – you’re not going to get enough money.”