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The tax plan ahead

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POSTED: January 11, 2011 9:25 a.m.

In what may well be the single most significant report made to the General Assembly this session, a panel charged with reviewing the state’s tax code and making recommendations regarding it will present its findings to legislators and Lt. Gov. Casey Cagle on Monday.
That will be opening day for the legislature, which created the 11-member Special Council on Tax Reform and Fairness for Georgians in the 2010 session. The Republican-appointed council was charged with looking at the state’s tax code and revising it.
It will be interesting to see how deeply into Georgia’s tax system the panel delves. There is already an indication that the group has dug in a good deal deeper than had been expected. Its final report will probably be 50 pages long – five times bigger than had been planned.
State taxes have been a bigger issue than ever over the past couple of years. Before the recession, Georgia’s economy was growing at a nice clip. After late 2007, however, revenues began to spiral down and each of the last few legislative sessions topped the previous one as the most challenging that budget writers had dealt with. Despite several recent months of year-over-year increases in state tax revenues, the session starting Monday looks to be cut from the same mold, with some estimating that the state is on a course for a $1.5 billion deficit.
That, of course, can’t happen in Georgia. One thing that state government has done right has been to require that Georgia balance its state budget every year. When your state gets into the federal model of deficit spending, you end up in a situation like California where a former movie star in the governor’s mansion is forced to orchestrate an auction of state property to raise money to feed the gluttonous state kitty.
Maintaining balanced state budgets has prevented Georgia, which indeed has felt the pain of the recession, from being hit even harder. However, it does also require some painful – and unpopular – decisions.
Georgia’s tax income is generated by three taxes on income, sales and property. But the code is outdated in a lot of ways and exemptions have been made on a piecemeal basis over the years.
We had hoped legislators would establish a blue-ribbon panel that would start from scratch on Georgia’s tax code rather than just adjust what is already in existence. Still, we hope this panel had been thorough in its work.
Not much is known about what the recommendations of the council be, since a great deal of its work has been done secretly. That’s a concern, especially when you consider the ramifications its work could have.
There are some hints, though. Expectations are that the panel will suggest changes on most taxes the state imposes, including income taxes on individuals and companies, tobacco and motor vehicle fuel. Some also wonder if the sales tax on groceries that was done away with years ago will be reinstated and whether property tax rates will be affected.
It’ll be interesting to see what the panel comes up with, and whether the legislature will accept it, change it or ignore it, and whether new Gov. Nathan Deal with sign it into law if it gets passed by the General Assembly.
One thing is for certain – as Georgians, every one of us has a vested interest in how this tax reform turns out.

 

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