In this article by Greg Hilburn they mentioned how starting on April 1st
the state of Louisiana will be paying higher taxes. Just in the past week alone
the Louisiana State Legislature raised about $300 million in taxes for the rest
of the year, as well as a $1.2 billion for next fiscal year. However, this action
did not stop the budget cuts from higher education or health care programs. The
Louisiana Bond Commission agreed to make about $82 million in quick cash
that will help pay the long term debt of the state. They blame the state’s debt
on the declining taxes and tax cuts in the past years. As of now there is a
budget deficit forecasted at $750 million for the next year.
Most of these taxes will come from temporary sales
tax on any item you may purchase, except for food or prescription drugs,
including other exemptions. However, taxes on items such as cigarettes and
alcohol are permanent. Also, they have
other implementation such as the 1-cent state sales-tax increase, 4-cent state
sales-tax exemption elimination, alcohol taxes on tap, cigarrates tax hikes, auto-rental
tax reinstatement, corporate franchise tax expansion and insurer credit
reduction that are further explained in the article. Retailers are worried
about this because Louisiana will have the highest sales-tax rate in the
country especially once we combine the local sales taxes.
I believe this is an
absurd measure that will certainly affect people with a very low income. First
of all, they are cutting funding from schools and health care services that actually
benefit those with lower income. Two weeks ago I was able to work with an
organization in Louisiana that provided new homes to families with lower income
that were affected by the devastation of Hurricane Katrina. Although it has
been 10 years since this natural disaster the state of Louisiana has been
recovering very slowly because the government has offered very little financial
help. It will most definitely be hard for the state to recuperate from their
debt but it will be even harder for those who are financially struggling to pay
higher taxes.
Link : http://www.usatoday.com/story/news/politics/2016/03/18/louisiana-taxes/81974076/
Yeah this is unfortunate for low-income individuals, because it's likely they will be impacted the most. I wonder if there may be other ways of the government increasing there savings without have to impact those in a lower socioeconomic status. I think higher-education and health care are probably two of the most important things that need funding. I think this may be penny smart but pound stupid, in other words some of these funding cuts may actually cause unintended consequences which may be more costly in the long-run.
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