Louisiana to Rebate Sales Taxes to Foreign Visitors--First State to Do So

Louisiana has become the first state to give sales tax rebates to foreign visitors, a move designed to boost the tourism industry and create jobs in a state plagued by double-digit unemployment.

Under a bill Gov. Buddy Roemer signed into law Friday, the state will join 17 European countries that offer similar refunds.

“I think it is a fantastic concept for us in that we are the first in the nation to do it,” said Lt. Gov. Paul Hardy, who serves as the head of Louisiana’s Department of Culture, Recreation and Tourism.

The program, which the state hopes to implement in early 1989, will offer the rebates only for retail sales. Hotel bills, rental cars, and restaurant and bar tabs will not be affected.

“While we’re rebating only the tax on shopping, we will get more (visitors) paying the sales tax on everything else,” said Eugene Schrieber, managing director of the World Trade Center in New Orleans.

According to a World Trade Center study, 301,000 foreign tourists from countries other than Mexico and Canada visited Louisiana in 1986 to take in such attractions as New Orleans’ French Quarter, pre-Civil War plantation mansions in southern Louisiana and the Cajun country.

During that year, Louisiana attracted 3.4% of overseas tourists who came to the United States, ranking it 15th among the states.

“I don’t think Louisiana is getting its fair share,” said Hardy, who campaigned last fall on the theme of building the state’s tourism industry.

Schrieber said the state will make up for the lost sales tax revenue on retail purchases when tourism increases by 12%.

Backers believe the program will boost tourism by 26%, which would create 1,200 new jobs, increase payrolls by $12 million and give the state a $2.2-million revenue increase after the tax rebates, Schrieber said.

Louisiana’s unemployment rate, which was 10.6% in May, has been in double digits since the collapse of oil and gas prices in the early 1980s.

Schrieber said Louisiana is moving at the right time to implement the program because the value of the dollar is low against other currencies, making American goods cheaper for foreign tourists.

“You have a tremendous influx of tourists coming into the United States,” he said. “This is the perfect time to do this.”

Durng 1986, California had 3 million foreign tourists, not counting visitors from Mexico, Florida had 1.8 million and New York counted 2.2 million, Schrieber said.

“We could be getting a lot more foreign visitors,” he said. “The growth potential is tremendous.”

Under the new law, retailers who opt to participate in the program will pay an annual $100 fee to be listed in a tax-free shopping guide given to foreign tourists.

A foreign tourist buying an item in a participating store will show a passport and a round-trip airline ticket, indicating his stay is less than three months, and receive a refund form from the retailer. The refund will be obtained at a Louisiana airport or by mail.

During legislative debate, some lawmakers questioned the wisdom of offering the rebate at the same time they were imposing a 2-cent sales tax increase on food, motor fuel and utilities in an effort to balance the state budget.

“I haven’t been here for 40 years making these types of mistakes,” said state Sen. B.B. (Sixty) Rayburn, dean of the Legislature.

But state Sen. Bill McLeod compared the rebate to “loss leaders” that grocery stores use to attract customers.

“They (tourists) will save a pittance and leave a lot,” he said.

Schrieber said that while foreigners will not flock to Louisiana merely to take advantage of the refund, the program will provide more visibility for the state’s tourist attractions.

“It has a tremendous potential for publicity and promotion,” he said. “If it’s working for them over there, why wouldn’t it work now?”