House rejects governor's half-cent sales tax proposal

BATON ROUGE — The House on Thursday rejected a bill that would have extended a half-cent of sales tax that Gov. John Bel Edwards has said is needed to avoid significant budget cuts.

The vote was 60-40 in favor of the bill, but it needed a two-thirds majority, or 70 votes, to pass. Thirty-six Democrats, 21 Republicans and three independents voted for the bill, and 38 Republicans and two Democrats voted against it.

The vote came after a Republican bill to limit the sales tax extension to four-tenths of a cent was amended to half a cent. Democrats said they will continue to seek the higher amount, which many Republicans have opposed in an effort to shrink the size of state government.

Another bill that would have temporarily renewed a half-cent of sales tax was withdrawn earlier Thursday after a U.S. Supreme Court ruling on internet sales-tax collection added another complication to the tension of the 10-day special session to deal with a projected $648 million budget shortfall.

The ruling was good news for Louisiana, which should be able to collect sales taxes from more Internet retailers, including those without a physical presence in the state.

When those online tax collections will kick in — and how much revenue they will generate — was in dispute, which makes it more difficult for legislators to compromise over how much of an expiring penny of sales tax they should extend.

Republican leaders seemed likely to focus on trying to pass the four-tenths of a cent bill, which was co-authored by Rep. Paul Davis, R-Baton Rouge, and House Speaker Taylor Barras, R-New Iberia.

“I did think it was a good compromise,” Davis said about her bill, adding that her proposal was a compromise between the one-third of a cent extension preferred by the Republicans in the last special session and the half cent that the Senate voted for then.

Davis’ proposal for a four-tenths of a cent renewal would bring in roughly $424 million in revenue, while a half-cent renewal would provide about $510 million.

The Supreme Court’s 5-4 decision Thursday overturned a 1992 ruling limiting states’ ability to collect taxes on online purchases by residents. That ruling had said that the Constitution’s interstate commerce clause prohibited states from requiring businesses to collect sales taxes if the company had no property or employees there.