Ga. lawmakers propose tax overhaul plan

ATLANTA (AP) ? The property tax on cars and trucks would be gradually phased out for Georgia residents and married couples would get larger tax breaks under a last-minute proposal Monday from Republican lawmakers.

The bill would mean that people who hold onto their cars would have to keep paying an annual tax pegged to the car's value, but those who buy new or used vehicles after it goes into effect would not.

Republicans want to give big tax breaks to businesses such as Delta Air Lines Inc., manufacturers, the agriculture sector and companies promising to relocate to the state. All those perks come at a cost. Budget analysts predicted the changes would create a roughly $50 million deficit next year, a gap equal to less than 1 percent of the current state budget.

"We'll find the money in the state budget," said Sen. Don Balfour, a ranking Republican and accountant who presented the plan. His proposal was released in the waning days of the legislative session and ahead of this year's elections. A major priority for Gov. Nathan Deal, the package is a smaller plan compared to an effort that failed last year.

Under questioning, Balfour said he was unaware of any plans to offset the loss in state revenue triggered by the plan with new sources of money or budget cuts. He said the actual cost of the tax breaks may be smaller and that the economic growth created by the tax changes would attract new businesses that generate more tax money. He referred to plans by Caterpillar Inc. to build a $200 million manufacturing plant near Athens.

"If we can bring companies to Georgia like we're bringing Caterpillar to Georgia, we'll be in good stead going forward," Balfour said.

Democratic Rep. Stacey Abrams, the House minority leader, said her decision on whether to support the bill hinges on how lawmakers pay for the tax cuts, especially after the state made reduction to welfare programs.

"There is a budget deficit," Abrams said. "The question is how do we fill that hole and what priorities do we sacrifice?"

Under the plan, GOP lawmakers would eliminate the annual property tax paid on motor vehicles purchased after March 1, 2013. Instead, motorists would pay a one-time fee based on the vehicle's value that tops out at 7 percent in 2015. People who purchased their cars and trucks before the proposed change in the law would continue paying annual property tax bills until they buy another new or used vehicle.

Married couples could claim $1,000 to $2,000 more in money exempt from the state income tax under the plan. Georgia would save money by setting a $65,000 cap on the amount of income that retired people can shield from state taxes, a move likely to prove unpopular with seniors. That cap had been scheduled to rise to $200,000 by 2015 and become unlimited the following year, according to a draft analysis that Georgia State University's Fiscal Research Center provided to lawmakers.

Republican lawmakers and GSU officials refused Monday to immediately release the financial analysis from the university, although Democratic lawmakers distributed it. Late Monday, state officials published an analysis that largely mirrored the GSU report.

Another provision would hit residents in the wallet. Lawmakers want to force out-of-state retailers, particularly large Internet websites like Amazon.com, to collect the sales tax owed by Georgia buyers. Right now, Georgia customers must pay sales and use tax on their online purchases, though few people voluntarily send in the money.

Other changes would reinstate a sales tax holiday timed in August and October for people buying back-to-school supplies and energy-efficient goods.

In a proposal sought by Deal, the state would phase out over four years the sales tax on energy that manufacturers, miners and newspaper publishers use to produce their goods. Proponents of the change describe it as a way to enliven a manufacturing sector that has recently slumped.

"That will go away so we get aligned with most other states," Balfour said. "Hopefully, this helps our manufacturing friends."

Deal spokesman Brian Robinson did not immediately respond to calls seeking comment on Balfour's proposal.

In other proposals, the bill would:

? Widen the sales tax exceptions on materials that farmers use to grow or raise their products;

? Continue a tax break on jet fuel that benefits Atlanta-based Delta Air Lines.

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Follow Ray Henry at http://www.twitter.com/rhenryAP.

Source: http://news.yahoo.com/ga-lawmakers-propose-tax-overhaul-plan-151100357.html

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