House Speaker David Ralston interrupted a hearing on a proposed rewrite of Georgia’s tax code Thursday to lavish thanks on the citizen-led committee that produced it.
But he did not endorse it or commit to bringing it to a vote this year.
“I think it’s a bold plan,” he said. “I think it is one that I am not endorsing or rejecting at this point.”
Since its release last month, the tax plan has attracted considerable resistance. Conservative groups have worried it would raise taxes, while liberals warned it would hurt the poor. Meanwhile, special-interest groups have lined up to preserve their tax exemptions.
Ralston did not put a time limit on bringing the plan forward but said he expects legislators to look at the plan as a whole and not just take the parts that are most politically expedient.
“I think it was designed to be a system rather than individual slices," he said, "so I think that’s the only way it works.”
The plan is the product of six months of hearings and discussions by the Special Council on Tax Reform and Fairness, which was charged last year by the General Assembly with making Georgia’s tax structure more competitive and “fair.”
The proposal would lower income taxes, relieve businesses of some taxes on production and shift the burden of funding state government on consumers by removing scores of tax exemptions and restructuring the way other consumer goods are taxed. Virtually every proposed change has upset someone.
On Thursday, a joint committee charged with forging the plan into legislation delved into a recommendation to replace local franchise fees on communications services such as telephone and cable television with a 7 percent gross receipts tax charged at the state level.
House Majority Leader Larry O’Neal, R-Bonaire, said that change has some local government officials concerned about losing revenue.
Mercer University economist Roger Tutterow, who served on the tax council, said the proposal calls for returning 3 percent of the tax to local governments to replace lost revenue. Tutterow said the change would expand communication taxes to currently untaxed services, such as satellite television and Internet-based telephone, which would generate enough revenue to ensure local governments do not lose money.
The satellite television industry says its inclusion in the proposal is unfair because it does not require the use of public rights of way for transmission lines, as does cable television and telephone service.
"This proposal would force satellite television subscribers to subsidize a basic business expense for cable," said Damon Stewart, a lobbyist for DirecTV.
Rep. Mickey Channell, R -Greensboro, a co-chairman of the joint committee, said he is not certain what the next steps will be.
“The legislation that created this joint committee said we must introduce a bill that contains all of the recommendations of the council. Key word: introduce," he said. "From that point we’ll have to see what happens.”
Meanwhile, groups are lining up to exert influence on that process.
The Georgia Budget and Policy Institute released recommendations Thursday to ease the plan's expected impact on poor and middle-class taxpayers. The institute suggests lowering the income tax rate from 6 percent to 4.5 percent, instead of the tax council's recommended 4 percent, and adding a refundable tax credit for lower income brackets.
The institute said the tax credit is needed to offset higher sales taxes, especially a proposed 4 percent sales tax to groceries, which would have a greater impact on poor families.
Channell said there is room in the process to entertain such suggestions. Tutterow said tax council members expect some alterations to the specifics of their plan, as long as its overall philosophy remains intact.
“We are making recommendations in terms of principle and framework, and the gentlemen in the General Assembly have to make the final call," he said. "Hopefully they are consistent with what our recommendations were.”
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