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Louisiana Governor Jindal delays controversial tax plan

Louisiana Governor Bobby Jindal (R-LA) speaks to the Conservative Political Action Conference (CPAC) in National Harbor, Maryland, March 15,
Louisiana Governor Bobby Jindal (R-LA) speaks to the Conservative Political Action Conference (CPAC) in National Harbor, Maryland, March 15,

(Reuters) - Louisiana Governor Bobby Jindal, a possible 2016 Republican presidential candidate, announced on Monday he will delay his controversial plan to eliminate the state income tax.

In his address to the opening of the state's 2013 Regular Legislative Session in Baton Rouge, Jindal said that as he traveled around the state to push his tax plan, he heard from citizens and lawmakers who said there was a desire to eliminate income taxes, but that his plan moves too fast.

"Here is my response - OK, I hear you," said Jindal, according to a text of the speech on the governor's web site. "So I am now going to park my tax plan."

He noted that several legislators have filed plans to phase out the income tax, and he wants to pass such a bill during this session.

Jindal was re-elected to a second term with two-thirds of the vote in 2011. But his Louisiana approval rating was down to 38 percent in a recent poll, lower than Democratic President Barack Obama in one of the most conservative U.S. states. The same poll, conducted by Southern Media & Opinion Research, found 63 percent opposed the tax plan.

Jindal's plan would have done away with all state personal and corporate income taxes. It also called for a 56-percent increase in the state sales tax, a much higher cigarette tax, and the elimination of some tax loopholes to make up the $3 billion shortfall from scrapping the income taxes.

To allay fears that the plan would hurt the poor, Jindal had proposed a rebate for low-income residents and some retirees.

The governor says the change would attract business by making Louisiana competitive with states such as oil-rich neighbor Texas, which has no income tax.

Eliminating income taxes would also be an attention-getting accomplishment for a Republican governor with national aspirations. Jindal's tax proposal has won praise from national conservatives such as Grover Norquist, the Washington, D.C.-based guru of anti-tax advocates who asks politicians to pledge never to raise taxes.

However, local skeptics have raised concerns that the sales tax increase would disproportionately hit poor residents, increase costs for businesses, hurt New Orleans' tourism industry and make it harder for local taxes to be imposed.

"A lot of the pressure seems to be coming from national groups. It's hard to find a constituency in Louisiana that was demanding an end to the income tax," said Jan Moller, director of the nonprofit Louisiana Budget Project, which advocates for raising revenue to provide more services.

The sales tax increase would require a two-thirds vote of both chambers of the legislature, which have Republican majorities.

The Louisiana Association of Business and Industry, normally an ally of the governor, opposes the tax plan. Republican House Speaker Chuck Kleckley has warned that the changes might increase the tax burden on businesses.

(Reporting by Mary Wisniewski and Stephanie Grace; Editing by David Bailey and Vicki Allen)

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