Primary goals remain reforming Georgia's antiquated tax code, bringing jobs to the state, and restoring trust in our economy.
Georgia's economy during the last decade was driven largely by the housing industry. As we have all witnessed, that industry took a huge hit around the world; Georgia did not avoid the disaster.
The key to avoiding that risk in the future and to insure we lead the nation in the recovery is jobs. We must focus on attracting a range of employment opportunities for our citizens.
The two most cited concerns regarding employment opportunities in the state are regulatory burdens and tax structure. While we should work to mitigate both of these issues, there is a special joint House-Senate committee devoted specifically to addressing the issue of tax structure.
During the summer of 2010, the Special Council on Tax Reform and Fairness for Georgians held meetings throughout the state in order to hear the concerns of our citizens. The Council combined recommendations in a report to the legislature, ranking those recommendations based on the difficulty of implementing them and the benefits that Georgians would enjoy. Of course, there is little that the General Assembly does that does not attract criticism. As such, tax reform is a difficult undertaking.
While we seem to agree that we want everyone to bear their fair share, credit is rarely given for tax cuts but criticism is abundant anytime the burden is shifted to require one to pay an additional tax, even if the net effect is neutral or less costly.
Additionally, we must carefully consider how each change might impact certain groups of citizens.
Here is a brief overview of how Georgia compares to other states across our nation.
Georgia tax rankings:
As of 2007, Georgia nationally ranks (Lower ranking=Higher tax):
*43rd in All State taxes ($1,923 per capita)(local taxes excluded)
When local taxes are included, this ranking changes to 34th ($3,481 per capita)
*25th in Individual Income Taxes ($924 per capita)
*34th in Sales and Use Taxes ($621 per capita) (Local taxes excluded)
When local sales taxes are included, this ranking changes to 18th ($1,038 per capita)
*40th in Corporate Income Taxes ($107 per capita)
*46th in Motor Fuel Taxes
*48th in Cigarette Taxes (as of July 1, 2010)
*12th in Beer Tax
As Chairman of the Finance Committee and Co-Chairman of the Joint Committee on Tax Reform, these issues are of paramount importance to me. We have spent countless hours reviewing scenarios that will lessen the tax burden on Georgians. I want you to know that our original goal was to be revenue neutral, however a revenue reduction would be nice too. Some ideas include:
Energy sales tax exemption:
Expanding the sales tax exemption on energy used in agriculture, manufacturing and mining. This would equal a $144,848,485 loss in state revenue, equivalent to a 0.11% increase in our income tax rate if we were to keep revenue neutrality.
Agricultural inputs exemption:
Expanding the sales tax exemption on agricultural inputs for qualified agricultural producers.This plan would be a positive impact and a necessary tool for our state's vital agriculture industry at an equivalent cost equal to a 0.01% increase to our income tax rate.
Tobacco excise tax increase:
Increases the tobacco excise tax for cigarettes from $.37 to $1.37/pack. Does not change the tax for other tobacco products. This plan would create a positive impact on our state revenue in the amount of $334,800,000 allowing a decrease in our income tax by 0.25%.
Food for home consumption inclusion:
Removing the exemption of state sales tax on food for consumption, same as with local sales tax, would allow a cut in income tax of 0.42% by generating an estimated $560,651,749.
Strengthening regulations on Internet taxes:
As we discussed last week, Georgia stands to lose $450 million dollars next year alone by not collecting due taxes on Internet orders made through companies such as Amazon and eBay. This would be another positive step for our state by bringing in approximately $450,000,000 in uncollected taxes, allowing us to lower our income tax rate by 0.34%.
Finally, it is important to look at the option of increasing state sales tax by 1%, bringing in $1,306,819,756 in state revenue and affording us the opportunity to lower personal income tax by 0.97%.
All of these plans contain positive and negative aspects. It is our job to weigh the situation and use a combination of these innovation reform packages to prepare Georgia for a thriving economic future.
This session, our goal is to lessen the burden on hard working Georgians and lower the income tax by moving toward consumption based taxes. Raising taxes on already cash-strapped families is not an option. Increasing state revenue is not a goal. As we review the need for tax reform in our state, it is helpful for us to look at how our state has recovered from the economic downturn felt throughout the past few years. No, we are not out of the woods. But Georgians, from elected officials to constituents just like you, have banded together to look at innovative solutions in order to begin repairing and restoring our economy. I look forward to hearing from you as we approach the 2012 Legislative Session.