By Mike Klein
The Georgia House overwhelmingly approved tax reform legislation Tuesday afternoon, sending the bill to the Senate on the wings of a powerful 155 – 9 bipartisan victory lap. Speaker David Ralston closed debate with a rare appearance in the well, telling members to, “Vote Green!”
Ralston personally thanked A.D. Frazier, chairman of the 2010 Special Council on Tax Reform that traveled the state and took testimony from hundreds of Georgians before it submitted a far-reaching … and some would say, politically challenging … set of recommendations.
“Some of you who followed that Council know that even though he was one of my appointees, I really couldn’t do much with him!” Ralston told House members. “He led what I believe is an effort that will continue to pay dividends in this state for many, many decades to come.”
House floor debate – scheduled to last three hours – was considerably shorter and entirely positive when it began in mid-afternoon. Rep. Mickey Channell, chair of the special legislative committee on tax reform, began the debate by acknowledging “the completion of a fairly long journey” but he soon added, “HB 386 is not a comprehensive tax reform package.”
Using phrases like “one more tool in that tool box” to attract new businesses, Channell and other speakers returned often to the impact on jobs. He said eliminating sales taxes paid on energy used in manufacturing was a reason Caterpillar will locate a plant that employs 1,400 near Athens. Channell said a sales tax exemption for projects of regional significance is an “important deal closer for our state” and “another matter that will help create jobs for the state.”
One by one other speakers including Minority Leader Stacey Abrams went to the well to support House Bill 386, which was immediately transmitted to the Senate. The legislation combines new revenues and tax changes that Channell described as pro-business and pro-family.
On the taxes side, the annual ad valorem tax paid on vehicles would be gone, and sales tax paid on vehicle purchases would also be gone, both replaced by a one-time only title fee paid at the time of purchase, whether through a dealer or in so-called casual sales between individuals.
The marriage penalty that results in married couples paying more than single individuals would be gone under the legislation. Tax-free retirement income would be capped at $65,000; it had been scheduled to increase annually but that will not happen. Channell said even at the current cap, Georgia loses some $700 million per year in tax revenue.
Other tax changes include reinstating the sales tax holiday for school supplies for two years starting this fall, elimination of a film production sales tax exemption because it did not work, new sales tax exemptions for agriculture, and a reduction in state sales tax charged on jet fuel sales.
The legislation also requires that all online retailers with Georgia customers must collect and remit sales tax. The tax will not generate a great deal of revenue but supporters say it will create a more stable playing field for the state’s brick and mortar retailers.
Soon after the House voted, Georgia Chamber of Commerce President and CEO Chris Clark said the legislation would “attract new investment, encourage job creation, provide support to existing businesses and approve our overall competitiveness.”
Click here for coverage of Tuesday morning’s special committee on tax revenue hearing.