How far will Jindal go to prove his tax isn’t really a tax

As feared — but predicted — the tax on New Orleans hotel guests is headed to the desk of Gov. Bobby Jindal. It’s hard to imagine that Jindal — who harbors dreams of riding all the way to the White House on the white horse of fiscal conservatism — would endanger his reputation by approving a tax hike when it finances such a dubious purpose. And before Louisiana’s GOP governor signs on the dotted line, we will show the world that Senate Bill 242 walks like a tax and quacks like a tax because it is a tax.

What else would you call a measure that imposes an additional levy of 1.75 percent on every hotel guest in the New Orleans region — with an “opt-out” procedure that gives hotel owners absolutely zero incentive or reason to opt out? A measure that creates a $12-to-18-million slush fund that will be controlled not by elected officials but by an opaque cabal of bureaucrats — one that won’t help New Orleans with its fundamental problems of crime, code violations and rowdy behavior, but instead aim to bring more young, rowdy partyseekers into the French Quarter and other historic neighborhoods.

Over at the city’s most-read website, NOLA.com, the headline writers declared this week, in plain English: “Hotels would be able to tax themselves under bill approved by the House Wednesday.” The hotels don’t really tax themselves, they tax their guests, And yet backers of SB 242 — including conservative members of the Louisiana Legislature who support the no-tax pledge of D.C. anti-government guru Grover Norquist — continue to insist that this tax is not a tax but an “assessment.” They claim to even have Norquist’s blessing in this rhetorical slight-of-hand (we would still like to see hard proof of that) — which to me only proves that conservatives will twist themselves in knots to help their allies in the business world. I would like to meet the slick lawyer that dreamed this operation up. Or maybe it was George Orwell. Is this the new Republican tax strategy?

The reality is that in the recent past, when business interests aren’t involved, Jindal has gone out of his way to reject very similar tax-hike measures, even in a case where the beneficiaries would be the hearing-impaired citizens of our state. Again, I direct you to the headline of this piece: “Gov. Jindal won’t hear of tax to aid deaf Louisianians“: 

Given the steep decrease in telephone land lines and the explosion in cell phones, the legislative bill to adjust the tax to pay for telecommunications services for the deaf seemed fair and reasonable. The bill before the House early in the session decreased the 5-cents-per-month tax on land lines to 2 cents and expanded it to cover wireless lines, which are currently untaxed. The penny ante tax swap would restore the Telecommunications for the Deaf Fund, which had fallen by half in recent years, to its 2005 level. But because fractions of cents can’t go on phone bills, the 2-cent levy would result in the deaf fund receiving about a half million dollars extra.

That overage, however, was a problem for the man in charge of tax policy in Louisiana. Grover Norquist would not hear of it. Norquist is the president of Americans for Tax Reform in Washington, D.C., and creator of the pledge signed by many American politicians to oppose all net tax increases. Certainly, he wasn’t following the debate at the time, but staff members for his ally, Gov. Bobby Jindal, sent word to legislators that a vote for House Bill 238 would be scored by ATR as a tax increase and, thus, a violation of the pledge.

Why would Bobby Jindal even consider flip-flopping on a matter like the hotel tax? Perhaps it’s because the body that will gain the most from this arrangement, the New Orleans Convention and Visitors Bureau, is run by a close associate of the governor. NOCVB CEO J, Stephen Perry was the chief of staff to then-Governor Mike Foster who gave a young Jindal his first job in government, 17 years ago.  Today, records just made public after a court fight shows that a big chunk of the monies that NOCVB gets from the state and other sources now goes toward exorbitant salaries and travel – so why break the tax pledge just to throw more money at Perry and his organization’s bureaucrats.  

And it’s not just Gov. Jindal who has a problem here. Inexplicably, there are 7 senators who’ve signed the Americans for Tax Reform no-tax pledge yet voted for either the initial or the final version of this bill:  Republican  Senate President John Alario, Republicans Jack Donahue,  Fred Mills,  Robert Kostelka, Gerald Long, and John Smith and Democrat Ben Nevers. Voters in their home districts need to learn of this hypocritical stance.

Look, I want to be clear: The reason that I and so many neighborhood groups in New Orleans oppose this measure is because it’s a bad bill – one that will make the quality of life in our city worse at a time when it desperately needs a shot in the arm. But to make this bad bill go away, it’s imperative that Gov. Jindal understands that signing off on this legislation will seriously tarnish his record on taxes. To help the governor understand the stakes, I am making preparations to go to court if and when this bill becomes law and seek a declaratory judgment, a Court ruling that will make crystal clear that SB 242 is  a tax under Louisiana law. I fully expect to win, and if Jindal insists on signing this measure or allowing it to become law through inaction in spite of that, we will make sure that every fiscally conservative Republican primary voter in Iowa and in New Hampshire is aware of what he’s done. Once the Courts rule it’s a tax it will be the Govenor who has egg on his face. 

I may be an optimist, but I still think the governor of Louisiana — when he sees all the options — will do the right thing.

For the NOLA.com coverage of the House passing the tax hike and sending it to Jindal, please read: http://www.nola.com/politics/index.ssf/2013/05/hotels_would_be_able_to_tax_th.html

To read of Gov. Jindal’s recent opposition to a tax measure that would benefit the deaf, check out: http://www.nola.com/opinions/index.ssf/2013/05/gov_jindal_wont_hear_of_tax_to.html

To see a report from TV station WWLTV about the exorbitant salaries paid by the NOCVB, check out: http://www.wwltv.com/news/Public-Records-Request-Shows-Proposed-Hotel-Assessment-Fee-Will-Double-Convention-Center-Budget-209283291.html

For more detailed information about convention center spending and other problems with SB 242, please read: http://www.brylskicompany.com/1/post/2013/05/cvb-ignoredpublic-records-law-spends-millions-of-taxpayer-dollars-on-salaries.html

The SmithStag white paper on the constitutionality of the pending tourism tax (PDF file) is here: http://www.brylskicompany.com/uploads/1/7/4/0/17400267/130528_supplemental_white_paper_tourist_tax.pdf

To read my May 29 blog post on the constitutionality of the measure, please check out: http://www.stuarthsmith.com/an-arguably-unconstitutional-tax-hike-races-toward-jindals-desk/

Check out my May 15 blog post first asking whether Gov. Jindal will endorse this stealth tax hike: http://www.stuarthsmith.com/jindal-to-embrace-stealth-tax-hike/

To read my May 10 post about this bass-ackwards scheme for New Orleans tourism, please read: http://www.stuarthsmith.com/stop-the-bass-ackwards-plan-for-new-orleans-tourism/

Check out the BGR report (PDF file) at http://www.bgr.org/files/reports/BGR-Now_Hotel_5-14-13.pdf

© Smith Stag, LLC 2013 – All Rights Reserved

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