Major tax shift scheduled with state Senate vote

mlee@macon.comMarch 22, 2012 

ATLANTA -- A new state proposal to kill some county taxes will eventually save Bibb taxpayers at least $3.7 million annually on car taxes. And would save them more during two sales tax holidays in 2012 and 2013. But an online sales tax and other changes that the state proposes in return are not convincing everyone that Bibb and other counties will recover what’s being cut elsewhere.

A bill scheduled for a full state Senate vote Thursday would by 2015 eliminate the car tag tax and let married people claim up to another $1,000 each in income exempt from state tax. The sales tax holidays would come just before school starts and apply to school supplies, computers and energy-efficient goods.

“I think on the surface it appears to be a fairly significant impact on our general fund,” said Bibb County Commissioner Elmo Richardson. The vehicle ad valorem tax alone was worth $3.7 million to the county in the year ending last June. The county’s whole budget for the year ending this June is about $83 million. He said tax data does not even break out the dollar figure of the county sales tax on energy, which the bill also eliminates, so it’s not clear what that’s worth.

In exchange for the cuts, the bill creates a tax rising by 2015 to 7 percent on car title transfers, both dealership and casual transactions. It lets seniors exempt only $65,000 of their retirement income from state taxes, reversing a previous decision to eventually remove all taxes from those pensions, annuities and other investments. It re-levies sales taxes on buys related to film production, and by Jan. 1, 2016, erases local taxes on energy used in manufacturing and mining. And online stores in most cases would have to remit sales taxes to the state tax man.

An official nonpartisan estimate from Georgia State University says the full price of the bill, across all Georgia’s 159 counties plus cities that levy any relevant sales taxes over the next three fiscal years will be $200 million.

The new tax structure may look like a net negative, but state Rep. Allen Peake, R-Macon, one of the sponsors, said it doesn’t take into account his prediction. “By putting more money in individuals’ and families’ pockets by the other tax cuts, it will spur the economy,” he said. “We are confident it will not impact county budgets.”

Clint Mueller watches tax laws for the counties as legislative director of the Association County Commissioners of Georgia.

“Some individual local governments may come out ahead and some come out behind,” said Mueller. “We acknowledge there are risks,” he added. But ACCG will be neutral on the bill.

Tax reform is always risky like that, he said. Even if the total tax take in the state is the same sum, shifting the bills from one category to another makes different winners and loser.

The bill promises that the state will true up counties’ budgets for a few years if killing the tag tax hurts too much, according to a formula in the bill.

“Assuming all the analysis works out,” said Mueller, House Bill 386 looks balanced overall.

Richardson is not convinced. For example, it’s true a county can reinstate a sales tax on energy used in manufacturing.

But, “that puts a burden on us,” said Richardson. “They remove it and we can put it back on? They make us look like the bad guy.”

He’s not too sure either that a tax holiday will in fact bring out so many shoppers that tax revenues will actually be higher than on regular shopping days.

“Certain segments of the population might do that. But not everybody buys school supplies.”

The bill, a newly amended version of a months-old proposal, already passed the state House earlier this week by 155 - 9. If it’s successful in the Senate, it will still need the signature of Gov. Nathan Deal.

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