Georgia senators plan review to modernize tax code

Georgia Senate Finance Chairman Chuck Hufstetler, R-Rome, has called for a two-year study to modernize the state's tax structure and possibly eliminate some special-interest tax breaks. (ALYSSA POINTER / ALYSSA.POINTER@AJC.COM)
Georgia Senate Finance Chairman Chuck Hufstetler, R-Rome, has called for a two-year study to modernize the state's tax structure and possibly eliminate some special-interest tax breaks. (ALYSSA POINTER / ALYSSA.POINTER@AJC.COM)

Credit: Alyssa Pointer

Credit: Alyssa Pointer

The leader of the Georgia Senate’s tax committee said Friday that he wants the state to do a two-year modernization review of its tax structure in hopes of both possibly raising revenue and getting rid of some special-interest tax breaks.

Senate Finance Committee Chairman Chuck Hufstetler, R-Rome, said the state provides about $9.5 billion a year in tax breaks for various businesses, nonprofits and industries.

Some have helped create or retain jobs, others haven’t done much to help the state, he said.

“There has been a lot of political pressure to keep them,” Hufstetler said during a policy conference put on by the Georgia Budget and Policy Institute, an Atlanta think tank.

The state has done limited reviews of tax breaks, and a panel called the Special Council on Tax Reform and Fairness for Georgians did a lengthy study aimed at modernizing the tax structure during the Great Recession.

However, the General Assembly only approved some of the group’s recommendations, often those sought by industries such as manufacturers and mining. They led to new tax breaks and changes in how Georgians pay some taxes, such as the gradual elimination of property taxes on cars.

Hufstetler said issues debated at the time included taxing internet sales and raising Georgia’s historically low cigarette taxes to pay for health care, two things that have been debated for more than a decade.

The General Assembly approved legislation last year to increase sales tax collections from customers of internet- and app-based businesses. Hufstetler said that will bring the state $600 million to $700 million a year in revenue that was owed but not always paid.

Hufstetler, some other Republicans and many Democrats in the Legislature have also backed an increase in the state’s cigarette taxes from 37 cents per pack to $1.35-$1.80 per pack. They said the state spends about $650 million a year to treat patients who are on taxpayer-funded health programs for tobacco-related illnesses. House Speaker David Ralston, R-Blue Ridge, has strongly opposed such an increase.

“As a lifelong Republican, Speaker Ralston opposes raising taxes on Georgians,” his spokesman, Kaleb McMichen, said.

House Minority Leader James Beverly, D-Macon, another panelist at the conference Friday, said the state needs the money as school and health care costs — which account for most of the budget — continue to rise.

“Let’s get it done because Georgians are hurting right now,” Beverly said.

Both areas took spending cuts last year because lawmakers feared the COVID-19 recession would dramatically reduce state revenue collections. That hasn’t happened, but Democrats are pushing to fully restore, if not increase, spending in those areas in 2021.

Sen. Jen Jordan, D-Atlanta, another panelist, noted that spending on the Department of Public Health — the agency on the front lines of fighting the COVID-19 pandemic — has seen little to no increase in state funding in recent years.

Gov. Brian Kemp’s budget proposal for fiscal 2022 — which begins July 1 — continues that trend, although his staff notes the agency has received more than $1 billion in federal funding during the pandemic.

Still, Jordan said the state has a tendency to go from crisis to crisis without having a long-range plan for funding its priorities.

She backed Hufstetler’s proposal to review the tax structure and get rid of special-interest tax breaks that don’t help the state’s economy.

“At the end of the day, we kind of need to clean our house,” Jordan said. “I am not against tax credits ... but it has to make sense.”

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