The Atlanta Business Chronicle has a good story about the agenda for the Georgia General Assembly. I really like the fact that Georgia is considering the Fair Tax!
Reforming the state tax code — perhaps to eliminate the income tax or raise badly needed funds for transportation — is likely to be a key focus of the 2007-2008 Georgia General Assembly.
But as legislators convene at the Gold Dome Jan. 8 to kick off the new session, GOP leaders in both chambers said the details are a long way from finalized despite intensive study this summer.
"We’re going to pass some kind of tax reform," said House Speaker Glenn Richardson, R-Hiram. "Whether it’s a flat tax or Fair Tax, I don’t know yet."
Top policymakers in the House of Representatives are working with former Ronald Reagan adviser Arthur Laffer, the father of supply-side economics, on ways to overhaul the tax structure. That includes the possibility of a flat income tax, in which all Georgia residents and companies would pay the same rate.
Six states have a flat tax, and seven, including Florida and Texas, do not tax income at all, giving them an edge over Georgia in recruiting and retaining companies, lawmakers say. They passed a $100 million corporate income tax cut in 2005 and may feel empowered to do more now, having solidified control of the legislature in 2006.
Some in the Senate, such as Majority Leader Tommie Williams, R-Lyons, are leaning toward a consumption-based system similar to the federal Fair Tax proposed by U.S. Rep. John Linder. In that scenario, all $9 billion in state personal and corporate income taxes (more than half the state budget) would be replaced by an additional sales tax of two or three cents per dollar.
Alternatively, legislators could dump the income tax and make up the revenue by removing many sales tax exemptions, though that may be a tougher sell.
A desire to bolster state reserves against future recessions and formally limit the growth of government spending may also temper enthusiasm for broad-based reform, said House Ways and Means Chairman Larry O’Neal, R-Warner Robins, whose committee oversees all tax policy.
Targeted breaks for business, such as eliminating the $273 million inventory tax (which hits retailers hardest) or the $140 million tax on energy used in manufacturing, should have a better chance this session, though they may have to compete with Gov. Sonny Perdue’s proposed cuts for seniors or a House plan to ditch the $627 million car tag tax.
Then there’s the pressing need to find more money to expand and maintain Georgia’s congested roads; state transportation officials predict a $200 billion shortfall through 2035 and have already delayed more than 500 projects.
Lawmakers could go for yet another penny-per-dollar sales tax, either statewide (in lieu of the current gas tax) or at the option of individual regions such as Atlanta, though neither alternative would provide enough to fully make up the deficit.
And even though the political will for wholesale tax reform is stronger than ever before, any major changes would require both a two-thirds majority in the legislature and approval by voters in a 2008 referendum.
The income tax may not be the only high-profile casualty of the session, though. One of Georgia’s last remaining "blue laws," a ban on Sunday sales of beer and wine at grocery and convenience stores, could also fall by the wayside.
Stores can sell beer and wine on Sundays in all but two other states, and polls indicate strong consumer support for lifting the ban in Georgia. The issue may come down to whether Republicans’ pro-business instincts (Sunday is the No. 1 shopping day in many supermarkets) outweigh their religious allegiances (several preachers say they want the ban to remain in place).
"I’m not adamantly opposed to it," Richardson said. "I do not think there is any logical reason that you can sell alcohol in a restaurant on a Sunday and not sell it in a can."
The General Assembly also will take on the state’s ailing health-care system and its regulation. A legislative study committee has recommended loosening key provisions of the state certificate-of-need (CON) program, which has helped control the competitive health-care marketplace for 27 years.
Also high on the itinerary is introducing more consumer-driven incentives into the market, especially health savings accounts — an effort led by state Sen. Judson Hill, R-Marietta.
Consumers may also take note of a full-court press by the former BellSouth Corp. (now AT&T Inc.) to make it easier for the telecom giant to enter the TV market and compete with cable companies. The Federal Communications Commission in December approved limited relief for AT&T and other telcos at the national level.
Last year’s two leading business issues — eminent domain and illegal immigration — should see little major action, although bills have already been pre-filed that would make English Georgia’s official language and prevent illegals from receiving state tax breaks.
State Sen. Chip Rogers, R-Woodstock, author of 2006′s sweeping illegal immigration reform, also plans to crack down on illegals who obtain license plates without valid driver’s licenses.
The 2007-08 session could also see the rise of new cities in DeKalb and South Fulton, while incorporation fever builds in Cobb and Gwinnett.
Finally, several recommendations from the new state energy plan released in December — such as additional incentives for conservation and alternative fuels — could soon become law.
