Kay Charbonnet, owner of a boutique called Kay’s, is worried her customers now have a reason to spend less money at her store because of a new tax.
The one-cent sales tax increase went into effect on April 1. This tax increase is one of the many taxes to come out of March’s special legislative session called to address the state budget deficit.
Before the increase, Louisiana had a four percent sales tax. Orleans Parish has a local rate of five percent sales tax.
According to Tax Foundation’s March 9 publication on sales tax nationwide, Louisiana has the highest local sales tax rate in the country. It also has one of the highest combined local and state sales tax rates at 9.01 percent, behind Tennessee and Arkansas, at 9.46 percent and 9.30 percent, respectively.
The Tax Foundation report was published before the sales tax hike, so with the extra penny, Louisiana now has the highest combined state and local tax rate in the country.
For Charbonnet, being in the state with the highest sales tax rate is not helping her business.
“Say you think something is going to cost you 52 bucks and it ends up being 57 or whatever it is, you’ll probably put some stuff back and I’m not in the business of people putting stuff back. I want them to buy it,” Charbonnet said.
She runs a small boutique on Magazine Street, which is lined with other small businesses. She said she gives a 10 percent discount to customers who own businesses on Magazine Street.
“I feel like that discount isn’t even an incentive anymore because it doesn’t cover any of the cost of my merchandise, it just covers the tax,” Charbonnet said.
Her boutique, like other local small businesses, has higher prices than a shopper might find at a larger chain store, and she is concerned that many people might be upset about the higher prices in her store.
Charbonnet said one of the women she knows, who has a small business called Green to Go, which delivers salads, told Charbonnet that she has already encountered customers angry with the increased price.
“I am assuming that probably this weekend, I’ll get a little chatter about it. I’m not excited at all,” Charbonnet said.
With French Quarter Fest the weekend after the tax hike began, Charbonnet said she is expecting customers to be disappointed in the next few days as they have to factor in the sales tax before making
their purchases.
Erin Perez, employee at Kay’s and patron of other local small businesses, said the sales tax increase will influence how she shops.
“If the cost of those items are going up because of the sales tax, I guess I’m going to have to, unfortunately, get less,” Perez said.
Perez also said she has a commitment to shopping local, so she is expecting that she will have to start scaling back on what she buys.
“I enjoy shopping at higher-end places and when the sales tax goes up on already higher-priced items, it makes it hard to afford,” Perez said.
Charbonnet said this sales tax increase served another blow to her and other businesses located by the intersection of Magazine Street and Jefferson Avenue, where road construction has essentially stopped foot traffic.
Charbonnet said the foot traffic, before the construction began, brought a lot of customers through her door, but now she is worried that the few customers still coming by will be deterred by the raised
sales tax.
Perez said she is concerned that this sales tax hike might affect the whole small business culture of Magazine Street.
“I think as we head into summer and things slow down and it gets hot in New Orleans, the small business owners have to do all they can. When something like sales tax is out of their control, it could potentially hurt them a little bit,” Perez said.