Georgians would pay higher sales taxes in exchange for lower income taxes under a series of proposals backed by some top Republicans in the state Senate.
But before the state's accountants start adjusting tax forms, remember: Tax reform plans were also the rage in the 2011 session but failed to get a vote as the GOP majority could not find consensus.
Lawmakers will return to Atlanta Jan.9 for the start of the 40-day legislative session and already changes to the tax code are an admitted top priority of leaders in both the House and Senate. But while House Speaker David Ralston, R-Blue Ridge, and Gov. Nathan Deal are keeping their ideas for reform to themselves for now, some in the Senate have already put plans on paper.
At a recent meeting of a joint House-Senate committee studying tax changes, Senate leaders released a summary of three major changes that could be considered. Each measure would be offset by an accompanying decrease in the state individual income tax. They are:
-- A $1 per pack increase in the state cigarette tax, to $1.37, which would raise an estimated $334.80 million a year; it would result in a 0.13 percent decrease in income tax.
-- A 1-cent increase in the state sales tax, to 5 percent, which would raise an estimated $1.31 billion a year; it would result in a 0.85 percent decrease in income tax.
-- Applying the existing 4 percent state sales tax to groceries, which would raise an estimated $560.65 million a year; it would result in a 0.30 percent decrease in income tax.
Senate leaders, however, stress that these are merely ideas and not a solid plan. Sen. Tommie Williams, R-Lyons, the chamber's president pro tem, said he favors an increase in consumption taxes for a cut in income tax.
"I believe if you do anything you ought to tax sales and not income," he said.
Removing the sales tax exemption on groceries would be fair, Williams said. "Everybody buys food. People traveling down [I-95] stop and buy food. People on our borders come across and buy food. Illegals buy food."
But, Williams said, Deal has publicly opposed taxing groceries, which could be a major stumbling block. Deal spokesman Brian Robinson said the governor was not ready to discuss his tax reform preferences, but said it will be part of a larger "competitiveness" project Deal will unveil at the Georgia Chamber of Commerce's annual Eggs & Issues breakfast Jan. 10.
"He'll focus his attention on proposals that will give Georgia an edge in terms of attracting jobs and tax relief for Georgia families," Robinson said.
In 2011, lawmakers spent most of the session discussing a tax overhaul only to see it fall apart in the final days amid squabbling between the House and Senate and Democrats and Republicans, as well as among Republicans themselves.
Last year lawmakers were hung up by their own processes, which required an up-or-down vote on the entire package. This year, however, they are free to pick and choose proposals and could make individual changes to the tax code without a massive overhaul.
But Ralston does not want to go piecemeal.
"I would like to see us adopt a comprehensive tax reform package," he said, though he did not want to discuss specifics.
Kyle Jackson, state director of the National Federation of Independent Businesses, a powerful voice at the Capitol, said his members would support a move away from income taxes. Owners of many small firms pay business taxes through the individual income tax, not corporate income taxes.
"Income tax is always, has always been and always will be the big driver for small business," Jackson said.
The NFIB is in the process of polling its members about various proposals and Jackson said he does not yet have the results. But the early returns indicate support for taxing groceries.
One tax change nearly all Republicans have said they support is eliminating the sales tax manufacturers pay on energy. Georgia is the only Southeastern state -- and one of only 10 nationally -- to levy the tax on electricity, gas and other energy used in manufacturing.
Senate Majority Leader Chip Rogers, R-Woodstock, said eliminating the tax is "one area I think we do have consensus on."
That idea has the full backing of both the NFIB and the Georgia Chamber of Commerce.
Chris Clark, president of the state chamber, said repealing the energy tax would have an immediate impact.
"It would send a message around the world that we've made a bold move to attract manufacturing here," he said.
Clark also would like to see the state to address the business inventory tax, a levy he said neighboring states don't charge, and adjust telecommunications taxes to boost broadband infrastructure in rural areas.
Democrats, meanwhile, want to see the state find other ways to raise revenue, or to lower individual income taxes, than raising the sales tax. Senate Minority Leader Steve Henson, D-Tucker, said the state has "$1.6 billion in special tax breaks or exemptions or subsidies."
"We need to look at those tax subsidies before we put sales tax back on food or some of the other types of measures that they're talking about," Henson said.
Staff writer Jeremy Redmon contributed to this article.
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