Two legislators have proposed a bill attempting to repeal the sales tax exemption, commonly known as the Stelly Plan, passed by Louisiana voters last year.
Rep. Jane Smith, R-Bossier City, and Rep. Wayne Waddell, R-Shreveport, are the authors of House Bill No. 348, which would reverse the sales tax exemption on food meant for non-commercial use, certain residential utilities and prescription drugs.
Passage of the bill would effectively negate House Bill No. 27 from the 2002 legislative session by Vic Stelly, Ind.-Lake Charles, and a vote in favor of the tax repeal in Nov. 2002.
Smith said most voters in her district overwhelmingly failed the Stelly Plan last year, in spite of its passage statewide.
“They believe the marketing of the [Stelly] bill did not allow for many voters to fully understand it,” Smith said. “We’re getting mixed messages from people about not knowing exactly what is exempt.”
Smith said the income-based tax system is unfair.
“If a tax filer earns even one dollar over $25,000, they are now in the highest tax bracket under the Stelly Plan,” said Smith. “People will be more upset over time as they begin to realize that this is the case.”
Smith said she and Stelly have discussed her apprehension about his plan in the past. She cited problems with the implementation of the Stelly Plan such as vagueness about which food items are tax-exempt.
“What I have to do is represent the folks back home, and my constituents were strongly against the Stelly Plan from the beginning,” Smith said.
Stelly said while Smith and Waddell have had calls from their constituents to write the bill, the legislation may be a bit hasty.
“The plan we put into place hasn’t even been entirely phased in yet,” Stelly said. “It really has not been given a fair shake yet.”
Stelly said he sees many obstacles ahead for Smith and Waddell’s bill to overcome if it is going to be passed by the legislature and placed before voters.
“The Ways and Means Committee, the legislature and the voters passed the Stelly Plan,” Stelly said. “They all seem to be satisfied, and I think we’ll be OK as far as the plan not being repealed.”
Stelly said the new bill may not even be allowed to come up this session.
“We’re not currently in a fiscal session of the legislature, so the consideration of the bill may be prohibited by the constitution,” Stelly said. “It just might not be appropriate for this session.”
Smith said regardless of whether their bill is allowed to come to the floor, she and Waddell wanted to get the bill on the legislative calendar.
Jim Richardson, economics professor and Revenue Estimating Conference member, which determines the amount of money spent by the state each year, says a reversal of the Stelly Plan would hinder attempts to change Louisiana tax structure into a more progressive system.
“The Stelly Plan takes away the tax burden for people on the lower end,” Richardson said. “It alters the persons who are primarily helping to pay for state government.”
Both Stelly and Richardson agree that the proposed legislation has very little chance of passage.
The bill is pending referral from the House floor.
Richardson says that all taxpayers, regardless of the decisions that are finally made about Louisiana’s tax structure, should anticipate changes in how much they will have to pay.
“Whether they will end up paying more or less in income taxes, in the end all taxpayers will see the changes happening,” Richardson said.