Politics & Government

Ga. Republicans, Democrats differ on tax privatization

ATLANTA — House Democrats went on the offensive Tuesday, pushing their own plan to shore up state funding by privatizing some sales tax collection oversight and to bring the state an extra $1 billion a year.

That would ease the pain of the massive budget cuts Gov. Sonny Perdue has proposed, as well as additional cuts that may be sought by leaders of the Republican majority in the state house.

But the Georgia Department of Revenue declined to back Democratic proponents on their $1 billion revenue estimate Tuesday. And Perdue quickly downplayed the idea of shifting sales tax functions from the department to local governments and private companies of their choosing.

“We looked at that before,” Perdue said Tuesday. “I think this is some vendors coming into the state and selling something that would probably create more problems than it gains. ... I’ve asked our revenue department for the last year to tell me what the pros and cons are and there are a lot of complications there.”

But state Democrats, including House Majority Leader and Dublin state Rep. DuBose Porter, called the legislation, “a plan that Georgia families can get behind.”

“We’re talking about sales taxes paid by consumers in Georgia that, for a variety of reasons, don’t make it to the state and local governments,” Porter said in a news release. “This bill empowers local governments, streamlines government and makes it more efficient to those it serves, and most importantly, puts money back in the budget and mitigates the need for destructive and counterproductive across-the-board cuts.”

Just how much new money would be generated is not clear. State Rep. Virgil Fludd is sponsoring the measure and he said $1 billion is a rough estimate. State Sen. Chip Rogers, a Republican from Woodstock who chaired a study committee on this issue last year, called that estimate “a little aggressive.”

Under House Bill 356, which contains the details of the plan, private companies wouldn’t handle the actual collection of sales tax revenues, Fludd said. The state would still do that, he said. But local governments would be able to follow up on collections, hiring firms to calculate how much is owed to them from local penny taxes, versus what the state gets to keep from its own sales taxes.

Currently, the state handles that and local governments pay an administrative fee for the service.

“The local government has a better idea of what businesses are in their jurisdiction, ...” said Fludd, D-Tyrone. “They can trigger more audits. They can force more compliance.”

Privatizing that function would allow local counties to get more detailed “point of sale” information about where sales tax revenues are generated, Fludd said. That sort of information is key when local governments hammer out sales-tax-revenue sharing agreements. The Department of Revenue’s inability to provide it was a big sticking point when the city of Macon and the Bibb County Commission last discussed their sales tax split agreement.

Fludd’s bill would also increase the number of retailers required to submit sales tax information electronically, increasing the efficiency of collection, he and other supporters said.

State Rep. Allen Peake had been considering carrying a Republican version of this bill in the House, but he said Tuesday that several issues came up as the language was being put together. Peake, R-Macon, said he was concerned how retailers would react, and whether they’d end up having to deal with too many different entities. That’s especially a concern for businesses with locations in multiple counties, he said.

Rogers said sales tax collection “is not a partisan issue” and that there is support for some type of reform.

“I think we all agree that we want to find those people that are not paying their taxes,” Rogers said.