New Sales Tax Levied on St. Tammany Commercial Real Estate

Commercial Real Estate in Mandeville, Covington, Madisonville

The St. Tammany Parish Council has approved a slight increase in sales tax for zones of commercial real estate in Mandeville, Covington, Madisonville, and Slidell. The new sales tax in these development zones will be 10.5% starting January 1st, 2017. These zones include commercial real estate property around the Interstate 12 (I-12) exits along highways 1077, 59, 1088, 434, and properties surrounding the Slidell Airport. Parish officials expect this new tax to produce more than $4 million each year to be used for any economic development projects in the parish. This tax includes a sunset provision which eliminates the tax after 15 years. With the high growth rate of St. Tammany Parish, officials believe that the time is now to start preparing for a parish population projection of over 450,000 residents by year 2030.

While this new tax is unlikely to change where and how consumers purchase products, the tax is burdensome for business owners, because the new tax is the highest in Louisiana. A sales tax rate that stands above the already high rate in Louisiana, 10%, doesn’t look good for potential and current business owners as some consumers will switch to alternative shopping experiences online and elsewhere.

The logic behind this new sales tax rate for Covington, Mandeville, and Madisonville commercial properties is that the population of St. Tammany Parish is expected to rise from 250,000 in 2015 up to 500,000 by 2030. Parish officials fear that if they do not prepare now for the expected growth, infrastructure will be failing to meet the needs of residents. As the population grows, St. Tammany Parish leaders want the region to be a place that is attractive to businesses, so that jobs are available to for children as they decide where to live and raise their families. Some supporters are praising this new sales tax as a progressive, forward-thinking policy that sets the area up for a prosperous future.

While there are many that support this new tax, just as many oppose it. Some deem it is a move in the wrong direction, because people who don’t make a lot of money are directly affected. Some business owners and developers are agitated that they weren’t involved much in the process, while they are the ones who are taking the risks of starting businesses and investing money into them. Companies that operate in these zones now have an unfair advantage with competing firms outside of the affected areas. Businesses that are affected by this new sales tax include Target, Sam’s Club, Belk and more commercial real estate in Covington, Mandeville, and Madisonville.

Whether you support the new sales tax or not, it will be fully implemented on January 1st. The tax will run for 15 years unless there is a change in policy. The sales tax increase is to be used for developmental projects in infrastructure and commercial real estate to attract larger, thriving businesses to St. Tammany Parish to create jobs for the children, so they see Mandeville, Covington, or Madisonville as a viable place to work and raise a family. The tax will inevitably affect businesses in a negative way, because increased taxes drive consumers away, but the hope is that the change is small enough to minimize customer defects for business owners.