Republican leaders are hoping to push legislation through the General Assembly this week that would touch most Georgia taxpayers by lowering taxes for married couples, people who buy cars from dealers and back-to-school shoppers.
It would make people pay sales taxes when they buy over the Internet, impose a new fee on people who buy cars from individuals and cap the amount of some money retirees can shield from income taxes.
Republicans released the proposal -- which also would provide tax breaks for manufacturers, agribusinesses and airlines -- Monday morning and planned to force a vote Tuesday in the House. If it passes, the Senate could take it up Thursday. State officials say that would keep the plan from lingering over the weekend. Typically that's done to avoid giving opponents time to build opposition.
Senate Rules Chairman Don Balfour, R-Snellville, who presented House Bill 386 to a joint committee on revenue Monday, pitched it as a tax cut, but others are skeptical because Republicans were slow to make available the financial data they used to build their plan.
“I approve of several of the provisions," said House Minority Leader Stacey Abrams, D-Atlanta. "I have questions about the impact on local government and the overall impact on the budget."
The bill proposes new tax exemptions for energy used by manufacturers, farm machinery and supplies, and airline fuel. It also calls for a return of sales tax holidays for school supplies and energy-efficient appliances.
One exemption would do away with property taxes on cars titled after March 1, 2013. Buyers wouldn't have to pay a sales tax, but the legislation calls for a one-time title fee that would rise from 6.5 percent of the value in 2013 to 7 percent in 2015. Georgians who keep their cars would continue paying property taxes until they buy another vehicle.
Also, the plan would increase the personal state income tax exemption for married people filing jointly from $5,400 to $7,400, or for each spouse filing separately from $2,700 to $3,700. A Georgia State University analysis said that would save married Georgians $362 million over three years.
Meanwhile, the amount of nonwork income seniors can exclude from income taxes would be capped at $65,000, or $130,000 per couple. That would cost high-income taxpayers about $92 million over the next three years.
Collections of sales taxes from Internet sales would raise more than $47 million for state and local governments while manufacturers and agribusinessmen would get more than $200 million in tax breaks over the next three years, according to the GSU estimates.
Balfour told the committee the tax plan would have a minimal impact on the state budget.
According to Georgia State University numbers, state tax revenue would decline about $53 million this year and $36 million in fiscal 2014 before rising slightly in 2015. Local governments, which benefit from the car property taxes and sales taxes on energy and others, would lose up to $217 million total. But state officials have promised to share some of Georgia's take so local governments don't bear the brunt of the tax cuts.
Clint Mueller, a lobbyist for the Association County Commissioners of Georgia, helped negotiate the returns for local governments. Local governments would be able to vote to reimpose a 3 percent energy sales tax for local manufacturers.
Abrams said she wants to see the financial models and tax collection forecasts Republicans based the legislation on before offering her support. Though all the ideas in the bill had been discussed before, this was the first time the package had been presented.
Others were were not happy.
Chuck Shiflett of Bartow County, who runs an Internet advertising and website development business, thinks collecting Internet sales taxes will fail. Similar laws in other states are tied up in court challenges, he said, and some companies have pulled out of states that passed laws similar to Georgia's proposal. The bill tries to legalize state tax collection by creating links to business in Georgia required for state taxation called physical nexus.
"In all of these states, Internet merchants fired their affiliates in order to avoid this new definition of physical nexus," Shiflett said. "... We have been informed the same thing will happen in Georgia."
Balfour believes the proposal would hold up in court and in the marketplace. After all, he said, Georgia is one of the largest states on the East Coast.
"You can afford to pull out of Wyoming," he said, "but you can't afford to pull out of Georgia."
A proposal to overhaul the tax system collapsed in 2011 under disagreements over cuts, exemptions and new taxes, and because it was difficult to pin down solid numbers on the impact on taxpayers. Republicans in charge of the process have said they don't want the final bill to create new taxes, though some individuals or businesses may pay more.
Balfour said measures such as the proposed elimination of taxes on energy used by manufacturers could help bring in new companies.
Roy Bowen, president of the Georgia Traditional Manufacturers Association, said it would make the state more competitive.
Energy costs are one of a manufacturer’s two biggest costs. They can amount to 20 percent of total costs, he said. Georgia’s energy costs are higher than neighboring states, putting manufacturers at a disadvantage, he said
Legislators say it's important to bring back the sales tax holidays on back-to-school and energy-efficient products because Georgia businesses are losing sales to neighboring states with such holidays.
A blue ribbon tax council appointed in 2010 to study the state's system recommended against the holidays, which Georgia had before budget cuts ended them in 2009. The council said the holidays only affect when Georgians shop, not where. Georgians who would buy school supplies in, say, June, just wait a few months to buy during the holiday.
Jeffrey Humphreys, a University of Georgia economist who served on the council, said consumers don't get enough in savings to cross state lines to shop.
"The cost savings are too small when you pay for gas," he said. "I think it has no impact at all [on sales]."
Legislators hope to introduce the bill with an up or down vote, meaning it could not be amended on the floor.
Projections from House Bill 386 from 2013 to 2015
Here are some major gains in state revenue proposed in the bill:
Car title fees: $503 million
Retirement income exclusion cap: $91.7 million
Internet sales: $47.7 million
Film Sales Tax Exemption: $35.8 million
Here are some major losses in state revenue proposed in the bill:
Exemption for married couples: 362.6 million
Energy tax exemption $167.4 million
Sales tax holiday: $81.1 million
Construction material exemption: $63 million
Jet fuel exemption: $55.2 million
Agricultural exemptions: $42.4 million
Source: Fiscal Research Center, Georgia State University
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