LAFAYETTE, La. (AP) — A proposal to end a rebate that helps businesses cover accounting expenses related to collecting sales tax remains up in the air after a lengthy debate at this month's Lafayette City-Parish Council meeting.
The Advocate reports (http://bit.ly/W561KI) the council delayed a vote on the sales tax issue last month, and there was no apparent consensus after Tuesday's meeting.
A small contingent of business owners pushed to keep the rebate in place.
J.D. Morein, who owns an automotive services company, said the rebate covers just a fraction of the cost of computer software and personnel needed to process sales tax payments.
"It's very expensive for us to collect money for you," he said. ". I see no reason to change what's going on now. It's worked for 50 years."
Local law allows businesses to keep 2 percent of total collections for city-parish government sales taxes as long as the sales tax payment is on time.
City-Parish Councilman Jay Castille has proposed an ordinance to end the rebate, which has been in place since the 1960s.
Ending the rebate would generate an estimated $1.5 million a year of additional revenue for the city-parish, according to figures from city-parish government.
The impact on individual businesses would vary depending on sales volume. For a retail business in the city of Lafayette with $1 million in annual taxable sales, the current annual rebate is $400.
Castille argued that collecting sales tax should be considered a routine cost of doing business, not an expense covered by a rebate.
"When you open up your business, going in, you know what you are getting into," he said. "These are taxpayer dollars that belong to the taxpayers."
Councilmen Andy Naquin and William Theriot argued for the rebate, saying it's vital to help businesses cover the tax collection expenses. "I don't see any reason to pull this rebate away from these businesses," Andy Naquin said.
City-Parish Attorney Mike Hebert said the rebate might be considered a legally impermissible donation of public money to private businesses.
Louisiana law generally prohibits local government from giving money, services or other things of value to private individuals or businesses.
"At a minimum it raises a serious legal question as to whether this would pass muster under the state constitution," Hebert said.
No vote has been scheduled on the tax rebate proposal.
Information from: The Advocate, http://theadvocate.com