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Georgia Tax Reform Council Final Report on Hold Until Next Monday

Mike Klein

The Georgia Special Council on Tax Reform and Fairness convened what was expected to be its final public meeting Wednesday afternoon in Atlanta.  Council chair A.D. Frazier trimmed expectations at the outset when he said recommendations will not be ready until next Monday afternoon. So this process that began five months ago will last at least five more days.

Frazier said the Council expects to propose creation of a new Tax Court to streamline citizen complaint hearings.  It will suggest legislators wait until next year before they vote on what Frazier said could be 50 pages of recommendations.  The Council is expected to suggest this analysis should be undertaken every four years. The last analysis was several decades ago.

“I didn’t want you to go away completely empty-handed,” Frazier told about 100 reporters, lobbyists and government affairs experts during his Atlanta presentation.  Council proposals will be reviewed with Governor-elect Nathan Deal, Lieutenant Governor Casey Cagle and House Speaker David Ralston before public release. None were in the room Wednesday afternoon.

A. D. Frazier

“We’ve tried to come as close to being revenue neutral as we could,” Frazier said. “It’s important for us to not lose the triple A bond rating.” The chairman said the state’s corporate tax rate, currently 6%, is not “nearly the driver in business decisions to locate here as we thought.” He said personal income tax rates, also currently 6%, are at least twice as important or more.

The 2010 General Assembly created the Special Council on Tax Reform to propose ideas to stimulate economic growth.  As a byproduct these ideas would also stabilize state government revenue and make it more predictable during economic downturns. The Council faces a deadline not later than next Monday to submit the final report. None of its proposals are binding on the General Assembly.

The final document is expected to discuss corporate and personal income taxes, motor fuel, cigarette and groceries sales taxes, corporate sales tax exemptions, new taxes on professional services and changes to communications industry taxes. Frazier said Georgia ranks 49th nationally in state taxes per capita, meaning just one state imposes less tax on its citizens.

Frazier reiterated tax policy should enable Georgia to remain competitive with its neighbors in a tax policy environment that will ensure predictability for industry and local governments. Frazier said the Council will not have any recommendations about local property tax reform.

Georgia’s economy has shown some signs of a rebound, but it is a long way from being healthy.  State revenue plunged and state agency expenses were markedly reduced during the economic downturn largely because revenue from personal income tax receipts went into a free fall.

Recent monthly revenue numbers are improved. Every month since June has shown a year-to-year gain. But the next state budget still faces a shortfall that could be up to $2 billion. Georgia has reduced expenses by some 20% since the economic downturn began in December 2007. “We’re lucky,” Frazier said, noting some states face deficits reaching tens of billions of dollars.

Mike Klein is Editor at the Georgia Public Policy Foundation.

January 5, 2011 - Posted by mikekleinonline | Uncategorized | A. D. Frazier, Georgia Public Policy Foundation, Georgia Special Council on Tax Reform, Mike Klein