GREAT tax plan debated

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ATLANTA --- House Speaker Glenn Richardson moved Monday to rally support for his plan to replace local property taxes with an expanded sales tax even as Gov. Sonny Perdue criticized it.

''I think a better plan is similar to what the speaker (is proposing), because he gives tax relief to everyone. ... We don't need to pick and choose certain groups to get tax cuts,''<br> -<b> State Rep. Ben Harbin, R-Evans</b><br> House Appropriations  Jim Blaylock/Staff
Jim Blaylock/Staff
''I think a better plan is similar to what the speaker (is proposing), because he gives tax relief to everyone. ... We don't need to pick and choose certain groups to get tax cuts,''
- State Rep. Ben Harbin, R-Evans
House Appropriations

Mr. Richardson, R-Hiram, spent most of Monday morning in a closed-door meeting with the House GOP caucus, answering questions and concerns about his "GREAT Plan for Georgia," a proposal that would strip away property taxes while expanding the number of goods and services covered by the 4 percent sales tax.

GREAT is an acronym for Georgia's Repeal of Every Ad Valorem Tax.

Lawmakers inclined to support the plan say it offered them the evidence they need that the idea, which some critics say is unworkable, will actually generate enough money to replace property taxes.

"What I heard this morning reinforces that idea that it is possible for us to eliminate property taxes," said House Majority Whip Barry Fleming, R-Harlem.

The meeting included a presentation by Arthur Laffer, a former adviser to President Reagan and a chief architect of Mr. Richardson's plan. According to participants, Mr. Laffer's conclusions differed from a study by Georgia State University that raised questions about the viability of the GREAT plan.

Projections from the meeting shared with reporters indicate that when some property taxes that would remain were taken into account, as well as the boost in local sales-taxes from the expansion of the tax, the state would need to make up almost $4.6 billion. That's less than half of the nearly $9.7 billion that many have said would have to be recouped for the plan to work.

"I'm very enthusiastic about the numbers, and that's what I was waiting to see," said Rep. Ron Stephens, R-Savannah.

But Mr. Stephens said the conversation of tax reform at the meeting was "a rather lively discussion," and some who have been more measured about supporting the plan continued to shy away from endorsing it.

"I'm warmer to it, but I'm not convinced that everything has been answered to my satisfaction as to how things work," said Rep. Chuck Sims, R-Ambrose, vice chairman of the House Ways and Means Committee, the chamber's tax-policy panel.

He said there were questions about how the state would divvy up the sales-tax receipts among cities and counties no longer charging the property tax, and about the timing of the measure.

Mr. Perdue expressed concerns about the plan during a speech to the Atlanta Press Club. He said the state is on a better fiscal footing than neighboring states, meaning no hasty action is required.

"I don't necessarily think Georgia's tax system is broken and in a crisis," he said. He said he's heard from local government officials from around the state worried that the tax shift will lead to an unreliable source of funds, particularly troubling now that sales-tax collections have begun to slow in the wake of the subprime mortgage crisis.

Mr. Perdue pointed to the examples of two other states where legislators imposed a tax on services and then quickly repealed it in the face of public anger, Florida in the 1980s and Michigan this year.

"Georgia is not in a position where we have to gamble with our revenue stream," he said. "... I think we need to have 100 percent confidence in all the changes we are contemplating to our revenue stream."

Mr. Richardson said he wasn't dissuaded by Mr. Perdue's position because he isn't trying to rush the state into anything rash.

"I think we're working together. We're having an open dialogue," the speaker said.

House Appropriations Chairman Ben Harbin, R-Evans, pointed out that Mr. Richardson's tax plan would help everyone who pays property taxes, while Mr. Perdue's signature tax relief proposal is targeted at senior citizens.

"I think a better plan is similar to what the speaker (is proposing), because he gives tax relief to everyone. ... We don't need to pick and choose certain groups to get tax cuts," Mr. Harbin said.

Reach Brandon Larrabee and Walter C. Jones at mnews@morris.com or (404) 681-1701.


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