United States: Louisiana House passes tax reforms; Illinois retailers challenge sales tax law
Recent developments in U.S. state taxation include significant tax overhaul bills advancing in Louisiana and online retailers in Illinois contesting the state’s sales tax system.
Louisiana House advances tax overhaul to Senate
The Louisiana House of Representatives has approved several bills during a special session called by Governor Jeff Landry, aiming to revamp the state’s tax code. Key measures moving to the Senate include transitioning to flat income tax rates, repealing the corporate franchise tax, and adjusting sales tax provisions.
One proposal (HB 1) seeks to implement a flat 3% personal income tax rate, while another (HB 2) aims to establish a flat corporate income tax rate starting at 5.5% in 2025 and decreasing to 3.5% in 2026. The House is also considering HB 9, which would extend the state sales and use tax to approximately 40 additional services, such as car washes, pet grooming, landscaping, and online dating services. This bill is expected to be revisited soon.
To address an anticipated revenue gap due to expiring temporary taxes, HB 10 proposes making permanent a 0.45% additional sales tax levy and the suspension of a 2% sales tax exemption for business utilities, with slight adjustments to the sales tax rate. Other measures include plans to repeal several business tax incentives, including Louisiana’s film production tax credit, to offset revenue reductions. Additionally, a bill proposes reducing the crude oil severance tax rate while increasing the rate for natural gas.
HB 6 seeks to authorize a statewide election in 2025 to amend the state constitution to reflect the proposed tax changes. The Senate’s response to these bills remains uncertain as the special session approaches its conclusion.
Illinois retailers challenge sales tax system
Online retailers are filing complaints with the Illinois Tax Tribunal against the Department of Revenue’s tax assessments, arguing that the state’s complex sales tax law is unconstitutional. Retailers claim the tax code results in varying tax rates and collection duties for competing sellers of identical products, based on where the selling activity is deemed to occur.
At least three complaints are currently pending, with more expected to follow. These legal challenges focus on the state’s response to the U.S. Supreme Court’s decision in South Dakota v. Wayfair, which expanded states’ authority to impose sales tax obligations on remote sellers. A new law intended to address these inconsistencies will take effect next year, but experts suggest it may not resolve all issues related to the system’s complexity.
Amazon challenges South Carolina sales tax assessment
Amazon Services LLC is disputing a sales tax bill from the South Carolina Department of Revenue, taking the matter to the state’s Supreme Court. The company contends that it should not be responsible for approximately $12.5 million in taxes assessed for the first quarter of 2016. Amazon argues that the 2019 amendment expanding sales tax liability to “marketplace facilitators” does not apply retroactively to sales made before the law was enacted.
The Department of Revenue maintains that Amazon is liable for the tax under the amended law. This dispute follows the Wayfair decision, which allowed states to impose sales tax obligations on out-of-state sellers without a physical presence. The outcome of this case may affect Amazon’s tax liability for a longer period and involve a significantly larger sum.
Source: Louisiana illuminator
Amazon South Carolina sales tax assessment
VAT/GST rates 2024 in Americas
| Country | Standard VAT/GST Rate | Reduced Rates |
| Antigua and Barbuda | No VAT tax but standard sales tax is set at 15% | Reduced rate of 14% |
| Argentina | The standard VAT rate is 21%. (enhanced rate of 27% for several metered utilities) | Reduced rate of 10.5% |
| Bahamas | Standard VAT rate of 10% | |
| Barbados | The standard VAT rate is 17.5% (Super rate of 22% mobile voice & text services) | A reduced rate of 22%, 10%, 7,5% |
| Belize | There is no value-added tax as such. Belize instead introduced a General Sales Tax in January 2006, which applies to a wide range of goods and services at a 12.5% rate. | |
| Bolivia | The standard VAT (IVA) rate is 13% under Article 15 of the VAT Law | |
| Brazil | Brazil imposes a state tax equivalent to VAT (ICMS) This rate is imposed by each state and is subject to a limit set by the federal senate. The rates can vary in the states from 17% to 18% (Rio de Janeiro has 20% as an exception). and the highest rate can typically reach 25%. | 7% |
| Canada | The standard federal Goods and Services Tax (GST) rate is 5% | |
| Chile | The standard VAT rate is 19%. | |
| Colombia | The standard VAT (IVA – Impuesto sobre las Ventas) rate is 19% | 5% |
| Costa Rica | The standard VAT rate is 13%, the same rate as the sales tax. | 4%, 2%, 0,5% |
| Ecuador | The standard VAT rate is 15% | 5% |
| El Salvador | The standard VAT (IVA) rate is 13% | |
| Faroe Islands | The standard VAT rate is 25% | |
| Guatemala | The standard VAT rate is 12% | |
| Mexico | The standard VAT rate is 16% | 8% |
| Panama | The standard VAT rate in Panama is 7%. There are supplementary rates of 10% and 15% | |
| Peru | The standard VAT rate is 18% | Effective September 1, 2022 until December 31, 2024, a 8% reduced rate will apply to micro and small suppliers of restaurant, hotel, and tourist accommodation services that receive at least 70% of their income from these supplies. |
| Puerto Rico | The sales and use tax (SUT) rate is 11.5% | 1% |
| Uruguay | The standard VAT rate is 22% | 10% |
| USA | There is no VAT in the USA. U.S. state sales and use tax rates vary between 2.9% and 7.25% | Reduced rates are offered for sales of specific products. |
| Venezuela | The standard VAT rate is 16% | 8% |