With recommendations to tax groceries, haircuts and Girl Scout cookies, the Special Council on Tax Reform and Fairness left state lawmakers with a big enough challenge.
The tax plan was supposed to modernize the state's tax code while keeping politics on the sidelines, but legislators say voters may be called upon to approve several amendments to the Georgia Constitution to complete the effort.
House Majority Leader Larry O’Neal, R-Bonaire, said voters may be asked to approve three changes to the state constitution, including a way of taxing communications services some have labeled as a tax hike. The proposed amendments would be on the ballot in November 2012, if the tax reform plan passes the Legislature.
While at least one tax council member said he's fine with voters getting a say, it's a chancy proposition for a plan that already has attracted critics from across the political spectrum.
“They have left us with some challenges to achieve some neutrality,” O’Neal said of the tax council’s plan.
Council members were adamant that the plan be “revenue neutral,” meaning the tax cuts and hikes in the plan need to balance out. The constitutional questions created by the tax council’s report further complicate the equation, since it gives voters a chance to veto portions of the plan even if it makes it through the Legislature.
“It’s terrible,” said Rep. Judy Manning, R-Marietta, who serves on the joint legislative committee working on the legislation. “Nobody wants to pay any taxes. Heck, I don’t want to pay taxes. But in order to get services, you have to pay some taxes.”
Tax council member and Mercer University economist Roger Tutterow said the council members tried to remake the way the state collects taxes without getting caught up in the politics of doing it. However, he said he is comfortable with taking parts of the plan to the voters.
“I would never say that asking for voter input on anything is bad. It’s one thing that makes this an effective republic," he said.
But, Tutterow said, it is a complicating factor. “What part passes and what doesn’t has implications for revenue collection,” he said.
House Minority Leader Stacey Abrams, D-Atlanta, who is also on the joint committee, said lawmakers have to deal with the recommendations as a single plan dependent on its many individual parts. It is such a complex process, she said she is not sure the necessary bills and constitutional work could be done this year.
University of Georgia political science professor Charles Bullock said this is a difficult political climate to bring tax issues directly to voters.
"When voters see the word tax, their immediate reaction is no," he said.
Since 2012 is a presidential year, voter turnout would be high. The amendment questions would come at the end of a long ballot, and Bullock said many voters would be coming to them cold.
“We get to the end of the ballot and say, ‘What is this? What do I have to do?'" he said. “If you don’t understand it, the Pavlovian response is to vote no.”
There is a good chance voters will never get this opportunity since the plan's future in the Legislature is far from secure.
Tax council members have defended the plan as a modernization of the state's complex and confusing tax code. If approved, individual and business income taxes would drop, with the burden of funding state government shifting to consumption taxes, including a broader state sales tax with fewer exemptions.
The result would be a more business-friendly and pro-growth tax structure, the council concluded in its January report.
Democrats, a minority bloc in both chambers, are deeply skeptical of the plan.
“We could do a constitutional amendment tomorrow, but the voters won’t have had a chance to have their say," Abrams said. "I would say that tells us to be cautious as to what we do.”
Several conservative groups have labeled the plan a tax hike. The Georgia chapter of Americans for Prosperity said in a blog post "most Georgians would rightfully oppose" the plan as introduced, and state director Virginia Galloway said it would be better for lawmakers to go back to the drawing board.
"These private citizens had great intentions," she said. "I hope [the Legislature] continues to study tax reform ideas and come up with something along the lines of what they wanted from this special council."
Staff writer April Hunt contributed to this article.
Constitutional questions
Voters could be asked to sign off on constitutional amendments to enact the plan submitted by the Special Council on Tax Reform and Fairness:
- The tax council proposes replacing local government franchise fees on cable television and telecommunications companies with a 7 percent fee on a wider spectrum of services, including satellite television and Internet phone services. The state would collect the tax -- estimated between $190 million and $200 million -- and return 3 percent to local governments, but divvying up the money would require a change in the constitution.
- Another part of the plan requiring a constitutional edit would set up a "trust fund" from which the state could dole out tax credits to attract businesses to the state or reward existing businesses for expansion.
- Voters also would have to sign off on changes to the way the Legislature handles new tax exemptions. The council recommends proposed tax exemptions should be filed in the first year of the General Assembly's two-year term but not acted upon until the second year unless two-thirds of lawmakers vote to pass it immediately. This cooling-off period requires a constitutional amendment, too.
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