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Louisiana to contract with Ernst & Young to review Jindal's tax plan

Louisiana's Department of Revenue will bring on accounting giant Ernst & Young as a consultant as it crafts a plan that would swap the state's income and corporate taxes in favor of a higher sales tax that could be levied on more purchases, department officials said. The firm, which could charge the state up to $180,000 for its services,...

Louisiana's Department of Revenue will bring on accounting giant Ernst & Young as a consultant as it crafts a plan that would swap the state's income and corporate taxes in favor of a higher sales tax that could be levied on more purchases, department officials said. The firm, which could charge the state up to $180,000 for its services, is intended to provide "guidance, support, analysis and clarity" to the tax initiative, according to a solicitation the department sent to top consulting firms.

Tim Barfield, the department's executive counsel and Gov. Bobby Jindal's point man on the tax proposal, has said the administration would be contracting with a firm as it developed the plan. No public bid was held on the contract, though the department reached out to several firms to ask for proposals, department spokesman Doug Baker said.

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Ernst & Young and Deloitte were the only two companies to submit proposals.

The firm's contract is now being checked by the state's Office of Contractual Review and is not yet available, Baker said.

The Department of Revenue's solicitation, which was sent in December, calls for the consultant to analyze the state's proposal for accuracy, check the assumptions used and provide a report on how it will affect various groups in the state. The report will also be used to determine whether the proposal meets the administration's goal of drafting a revenue-neutral plan, one that brings in as much money as the state's current tax system.

The contract will extend through the rest of the state's fiscal year, which ends on June 30.

Last month, Jindal announced in an emailed statement that he would be pushing to get rid of income and corporate taxes and franchise fees and move the state to a system supported by sales taxes.

Few details of the plan have been made public so far, but officials have said the final version of the proposal would include a combination of a higher sales taxes with fewer exemptions, new sales taxes on currently excluded purchases such as services and higher "sin taxes" on items like tobacco. Barfield has also suggested the administration will attempt to tie into pending federal legislation that could allow states to collect sales taxes on internet purchases.

Officials have said the proposal will not involve eliminating the sales tax exemptions on groceries, medicine and residential utilities as set forth in the state's Constitution and have also rejected the idea of imposing a state property tax.

Ernst & Young's proposal, which was provided by the Department of Revenue, cites previous tax analyses done for the California Commission on the 21st Century, the Ohio Business Roundtable and that state's Department of Taxation, and for state agencies in Michigan and Minnesota. The company also touts experience using regional models to estimate how tax changes will impact economic development.

The Ernst & Young proposal says the firm will be providing its services at half the standard hourly fee. Based on previous consulting jobs, the company estimates the total cost of the contract to be between $150,000 and $180,000, though the proposal notes the final cost of the project will depend on how much work it entails.

Deloitte's proposal estimated the contract would cost $30,000 to $40,000 a week, plus expenses.


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