Georgia Senate’s Republican majority has unveiled talking points for a renewed attempt to overhaul the state’s tax code.
The goal: Make Georgia more jobs-friendly by reducing income taxes and shifting the burden to consumption taxes. And level the playing field so the state can compete better with its neighbors for new businesses.
Of course, that’s easier said than done.
Credit GOP senators for not repeating one mistake made this year: offering up a 97-page mish-mash of proposals.
Lawmakers largely balked at the take-it-or or leave-it posture of the panel that drafted it. But they faced the challenge of making sure whatever was passed would be “revenue neutral,” with new revenue at least roughly offsetting tax breaks.
There were so many moving parts and so little credible data that legislators couldn’t broker the required tradeoffs.
In contrast, the new Senate plan has only a few elements:
1. Restore the sales tax on groceries.
2. Raise the state sales tax a penny.
3. Bump the cigarette tax up a buck a pack.
Senate leaders say that would raise more than enough revenue to let the state end sales taxes on energy used in manufacturing and help Georgia compete on equal terms with its neighbors.
In addition, they say, it would rake in enough additional dollars to cut the top income tax rate from 6 percent to 3.7 percent.
But what looks like a nice neat bow could come undone quickly.
For starters, Gov. Nathan Deal wants to ax the energy levy but has dug in his heels against taxing groceries and cigarettes.
A spokeswoman noted last week that Deal doesn’t comment on pending legislation. That lets him duck questions about whether he might change his mind.
Even so, Rep. Ron Stephens, R-Savannah, chairman of the House Economic Development and Tourism Committee, thinks Deal will be more flexible this time around.
Stephens, who’s pushed hard for the cigarette tax hike, figures the governor needs to make some compromises to drum up support for his Competitiveness Initiative.
Due to be released in January, it’s also intended to make Georgia more attractive to business and investment. It’s likely to include requests for substantial money for K-12 education, Stephens says.
“There is going to have to be some sort meeting of the minds,” he said.
Still, the grocery levy, which would fall heaviest on the middle class — many poor people buy food with tax-exempt food stamps — remains a hard sell. Democrats oppose it, and many Republicans may back off in the face of constituent backlash.
Polls show strong support for the cigarettes proposal, even among smokers. But many GOP lawmakers, including some top leaders, oppose all tax increases. There’s no sign they’ve gone squishy.
That leaves bumping up the sales tax.
Like the other proposals, it reflects the belief that Georgia will compete better for investment and jobs if it taxes consumption more and income less.
But there’s a hitch: Next year, Deal and others want voters to approve a series of regional penny sales-tax hikes to patch up Georgia’s crumbling transportation network.
A poll suggests solid support for the measures in much of the state.
But how much would you bet that will hold up if politicians hit people with a penny hike and then ask them to approve another?
Meanwhile, the state House is expected to unveil its own plan in January, just before the session begins on Jan. 8.
Maybe, it — like the Senate — will zero in on just a handful of issues.
If so, the tax dilemmas lawmakers confront next year may be fewer.
But they won’t be any easier.