published Friday, March 25th, 2011

Georgia lawmakers won’t reinstate grocery tax

ATLANTA—Lawmakers said Thursday they’ve abandoned plans to reinstate the state sales tax on groceries but still want to lower Georgia’s personal income tax rate to at least 4.5 percent.

Top Republicans said they are nearing an agreement on an overhaul of the state tax code. But the plan being hammered out Thursday as the legislative session winds to a close scales back the sweeping recommendations released in January by a legislative advisory council.

The agreement shaping up would slap taxes on a number of goods and services, including auto repairs and the person-to-person sale of cars.

But they are scrapping plans to tax things like Girl Scout cookies, haircuts and veterinarian visits, which had faced fierce resistance from voters.

“Frankly, we’ve heard from some folks back home,” said state Rep. Mickey Channell, chairman of the Joint Commission of Georgia Revenue Structure.

The revised tax overhaul was still being hammered out to ensure it’s revenue neutral — meaning the changes overall would not add or subtract from the total taxes the state takes in.

Channell said a bill could be ready by Monday.

Last year, legislators created a special commission to study the state’s outdated tax code. Members spent months traveling the state and issued a set of recommendations in January that included boosting the tax on cigarettes and reinstating the 4 percent state sales tax on groceries.

But the idea of reinstating the grocery tax was wildly unpopular in the Republican-led House and Senate, where some members campaigned on promises not to raise taxes.

On the income tax front, GOP legislators said that by lowering the personal income tax from 6 percent to 4.5 percent, the state would be more competitive with neighboring Florida and Tennessee, which have no personal income tax.

But the overall income tax revenue would not drop. Instead, the state would cap itemized personal deductions on those who earn more than $100,000 a year.

Among the other issues on which Republican lawmakers appeared to have reached consensus:

• Eliminating the sales tax on energy used in manufacturing.

• Creating a uniform, statewide communication service tax of 7 percent, replacing a patchwork of taxes and fees currently being charged.

• Eliminating the exemption on retirement income of more than $35,000 for senior citizens.

One proposal that appeared to be dead, at least for now, is a reduction in the state’s corporate income tax, a key campaign pledge of Gov. Nathan Deal last year.

A Deal spokesman said lawmakers were recommending other proposals that Deal supports.

“The governor campaigned on tax reforms that would rev the state’s economic engine, make our state’s business tax climate more competitive and lessen the burden on Georgia families,” spokesman Brian Robinson said.

Lawmakers on Thursday also dismissed the tax council’s recommendation to hike the sales tax on cigarettes by 37 cents a pack.

House Democratic Leader Stacey Abrams on Thursday asked if the revenue estimates being used by lawmakers to draw up the plans were accurate.

“I am confident our estimates are conservative and are sustainable,” House Majority Leader Larry O’Neal replied.

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