Porter, other leaders stress sales tax collection

ATLANTA — The push to improve sales tax collections seems to have reached a tipping point at the state Capitol as leaders grapple with budget cuts and digest a recent study showing major gaps in the collections process.

It’s not entirely clear how much revenue the state stands to gain from cracking down on tax scofflaws, but it could easily be in the hundreds of millions of dollars, officials said. And Lt. Gov. Casey Cagle on Monday said there’s “a growing desire” among state legislators to address the issue.

Cagle and Speaker of the House David Ralston both said they expect movement on the issue this year.

At a gubernatorial debate in Atlanta on Monday, most of the candidates discussed this issue, calling for action, according to the Associated Press.

Cagle said a pilot program in several Georgia counties, including his home of Hall County, shows “fraud and abuse” in the system. The program compared local and state records to see if businesses were slipping through the cracks and not remitting sales taxes to the state. The Gainesville Times reported last week that the study found 957 Hall County businesses that weren’t on the Georgia Department of Revenue’s sales tax list. Nearly 700 businesses were remitting sales taxes but didn’t have a business license in the county, the newspaper reported.

The study is leading to more calls to fully merge Department of Revenue tax databases with local ones to catch businesses that aren’t paying sales taxes or business license fees.

“If they would cooperate, we would collect most of this money in the next six months or so,” said state Rep. DuBose Porter, who has been beating the drum for these changes.

Porter, D-Dublin, said he thinks there’s enough money out there — at least $250 million — to avoid furloughing teachers and other state employees as planned to balance the state budget. He also continued Monday to push a related idea: the privatization of sales tax collections.

That would allow local governments to hire private companies to collect, or at least audit, sales tax collections instead of leaving it up to the state. The idea came from a Republican-led study committee that met in 2008 and looked at how this process was implemented in Alabama.

But the issue died during last year’s legislative session, largely over concerns that large businesses operating in multiple counties would have to file returns with dozens of local governments instead of just the state.

Democrats quickly picked up the mantle on the issue and called for these reforms. Now Porter has made improving sales tax collections one of the largest planks in his 2010 gubernatorial campaign.

Cagle, a Republican who heads the state Senate and influences the flow of legislation there, said Monday he’s not sure whether privatization is the way to go. The Department of Revenue may simply need more tools to crack down on scofflaws, and Cagle said he was “very open” to both ideas.

There also has been talk of forming a clearing house of sorts, where local governments would partner together so that large retailers could submit one set of paperwork to satisfy all jurisdictions at once.

“Obviously we’ve got to do a better job of collecting sales tax,” Cagle said Monday. “This is the year by which we need to address that.”