Georgia reluctant to raise tax rates

Nathan Deal: Governor says, "We must grow ourselves out of this situation. We cannot tax ourselves out." He suggests lower business taxes to bring in more jobs and businesses.

ATLANTA --- Legislatures in some states have grudgingly raised taxes to help them tide the government over the tax-collections slump triggered by the recent recession. Not Georgia.


Illinois is the most notable by boosting income-tax rates 66 percent earlier this year, but other states have either boosted them or are considering it.

In fiscal year 2010, 29 states enacted increases in taxes or fees for a total of $24 billion, according to the Council of State Government.

For the current fiscal year, states raised another $6 billion in added taxes and fees, according to the National Association of State Budget Officers.

In Georgia last year, lawmakers raised hundreds of fees, eliminated $55 million in sales-tax exemptions and levied a new tax on the revenue of hospitals. Those higher fees, though, brought in $27 million less than projected.

This year's budget writers are cutting spending, first to account for the lower fee revenue and second to account for federal stimulus funds that expire.

They are looking at a $2 billion shortage from the state's revenue peak in fiscal year 2008. Since then, some of the biggest spending programs have gained more beneficiaries, such as Medicaid, PeachCare for Kids and enrollment in all levels or education.

A coalition of more than 60 advocacy groups such as AARP, Georgia Association of Educators and the American Cancer Society is making daily appeals for a tax increase to forestall those cuts to social services.

Calling itself 2020 Georgia, the coalition writes, "A balanced approach that brings in enough money to pay the bills and invest in the future is the real solution for the challenges Georgians face every day. Balance today holds down costs tomorrow and makes Georgia an attractive place to raise a family and start a business."

The health groups in the coalition call for a $1 added to the cigarette tax to raise $300 million while also discouraging some from lighting up .

"There is a reluctance to even suggest raising taxes because there are so many people who have taken a pledge not to raise taxes," said Senate Minority Leader Robert Brown of Macon.

Gov. Nathan Deal often says, "We must grow ourselves out of this situation. We cannot tax ourselves out." His prescription, one shared by the other Republican leaders of the General Assembly, is to lower business taxes and regulations so that companies can put people back to work who'll then pay taxes as the economy improves.