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Many Stores Still Take Dropped Tax Survey Finds Illegal Food Sale Charge

Posted on: Monday, 25 July 2005, 18:00 CDT

RUSTON - It started with a shopper noticing he had been charged on food a state sales tax that supposedly had been eliminated by the 2002 "Stelly" Amendment.

Gordon Walters, a self-employed appliance repairman from Rayville, wondered whether it was an anomaly or a potentially widespread trend.

"I went to 10 stores in Ruston on an informal survey and 10 out of 10 were still charging state sales tax," Walters said.

That was in 2004, more than six months after the July 1, 2003, date when stores - according to Louisiana Department of Revenue publications - were to stop charging the state's 4 percent sales tax on items such as candy bars, canned and bottled soft drinks, potato chips, packaged snacks, ice cream bars and pastries.

Walters surveyed more than 300 convenience stores throughout Louisiana and learned that nearly all were collecting the repealed tax.

He estimates the 2,700 convenience stores in the state are still collecting between $3 and $10 million annually in taxes on exempt items.

The Stelly plan placed a constitutional prohibition on the state sales taxation of all food items for home consumption. It did not affect city and parish taxes on such items, which may still be collected.

State Rep. Rick Gallot, D-Grambling, was contacted by Walters and promised to take action.

"I'll pass this on to the Department of Revenue because Stelly was designed to be revenue-neutral," Gallot said.

"We are going to have to find a way of connecting the dots to make them do what they're supposed to be doing. The state hasn't lived up to its end of the bargain."

In following up on Walters' survey, The Ruston Daily Leader found that some store owners who continued to charge the tax improperly did so out of ignorance and were able to quickly make required changes.

The newspaper visited 13 convenience stores at random and purchased a soft drink in 12 stores and sweet rolls in the other. Nearly a third of the stores were still collecting state sales tax in violation of Stelly.

The owner of one of them notified The Leader that he had corrected the way his computers calculate taxes on exempt items within two hours of the newspaper's visit to his gas station.

"We did it as soon as we found out we don't have to collect the state tax," Muhammed Awan said. "Why shouldn't we? We don't get any benefit from collecting the tax. It actually makes more work for us."

Source: Advocate; Baton Rouge, La.

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