Louisiana has shed its unwanted title as the state with the highest sales tax rate in America, according to the Tax Foundation.
But the drop to second behind Tennessee is by the slimmest of margins — 100th of 1 percent.
Louisiana's average sales tax rate, which combines both state and local sales taxes, is 9.45 percent (the state portion is 4.45 percent). Tennessee's average rate is 9.46 percent.
Louisiana consumers had paid the highest sales tax rate in the country since 2016 when the Legislature passed and Gov. John Bel Edwards signed a temporary 1-cent sales tax to address a budget crisis.
That 1-cent tax expired on June 30, but the Legislature and Edwards replaced it with a 0.45 cent sales tax to avoid what had become knows at the "fiscal cliff."
The new tax prevented deep cuts to the popular college scholarship program TOPS and universities, among other programs and agencies.
“Louisiana’s statewide rate fell from 5.0 to 4.45 percent on July 1, 2018 as lawmakers decided to extend a portion, but not all, of an expiring 1 percent on the sales tax," the Tax Foundation's Jared Walczak and Scott Drenkard wrote in a newly released report.
"Due to the change and a small reduction in local rates, the state no longer has the highest average combined rate in the country, narrowly edged out by Tennessee.”
The Legislature met in Special Session three times this year before agreeing in June to pass the 0.45 cent sales tax, which is also temporary, expiring in 2025.
Edwards, who had asked for a half-cent sales tax, has hailed the compromise.
"By working together, for the first time in a long time, Louisiana’s budget will have the kind of stability and predictability we need to bring new business opportunities to our state and grow our economy," he said.
But others, like the anti-tax lobby Americans for Prosperity, said the Legislature and governor failed.
"The idea of government living within its means was never a serious idea ...," said John Kay, Americans for Prosperity's Louisiana director, in a previous statement.
"If only legislators worked as hard on fulfilling their promise of enacting tax reform as they have been on trying to raise taxes these special sessions, taxpayers would be rejoicing instead of feeling burnt by the legislators sworn to represent their interests," he said.
The five states with the highest average combined state and local sales tax rates are Tennessee (9.46 percent), Louisiana (9.45 percent), Arkansas (9.42 percent), Washington (9.19 percent), and Alabama (9.15 percent).
