Today is Day 35 of the 40-day Legislative Session

    The General Assembly has a full week of legislative days, which began yesterday, taking them to this Friday, April 1, Legislative Day 38. They will take the following week off, as it coincides with public schools’ Spring Break, and will resume legislative work on Tuesday, April 12 for Legislative Day 39. The targeted date for sine die (adjournment) is Thursday, April 14.

    As fewer legislative days remain, the pace quickens and legislative activity reaches a fever pitch on the floor of both legislative bodies and in the committees working legislation toward final passage. One piece of legislation which will dominate the week’s landscape is HB 387, which contains the recommendations of the Special Council on Tax Reform and Fairness for Georgians.

    The Joint Committee on Georgia Revenue Structure produced a committee substitute during a committee meeting late yesterday afternoon for HB 387. A summary, circulated among the business community states the following in regard to the broad concepts in the legislation:

General Conclusions:
    The Georgia General Assembly understands that the greatest way to pull itself out of this prolonged economic crisis is to provide its citizen workforce with high-paying job opportunities. These initiatives are the result of the first comprehensive analysis of Georgia’s tax code through the lens of global competition and a greater amount of technology-oriented job opportunities. A council composed of economists, business leaders and citizens established principles and guidelines, and traveled the entire state, to find an answer to the question, “What can make Georgia a better destination for business partners that will bring more job opportunities for Georgia’s citizens?”

    Cutting personal income tax rates would be the most advantageous change Georgia could make to attract high-tech companies and high-paying, quality jobs for Georgians.

Specific to Legislative Action:
    Alterations to the tax code are intended to be revenue neutral.
    This bill WILL NOT eliminate the Senior Income Tax exemption. This proposal will maintain the current $35,000 ($70,000 for a married couple) exemption.
    This bill WILL NOT tax Girl Scout cookies, veterinary services, groceries, prescription medicines, haircuts, AAA memberships, dry cleaning or increase taxes to cigarettes among others.

Flattens the Personal Income Tax Rate (Creates Job Opportunities)

• Lowers the personal income tax rate by 25 percent from 6 percent to as low as 4.5 percent, possibly even lower.
• Our neighbors to the north and south, Tennessee and Florida, have no personal income tax and Alabama taxes personal income tax at 5 percent.
• Keeps current deduction for contributions to college savings plans
  (529 plans)
• Keeps current social security deduction
• Eliminates the sales tax on energy (Creates Job Opportunities)
• Georgia is the only state in the Southeast (except for North Carolina, which taxes energy at a reduced rate) and one of only 14 states in the nation that imposes a sales tax on energy used by manufacturers.
• Manufacturers are among the largest users of electricity and natural gas. High energy costs are repeatedly cited as significant obstacles to the manufacturing sector because they are often the single largest expense in the manufacturing process.
• Again, this measure will instantly make Georgia more competitive as we try to bring jobs to our state and fight through this economic recovery.
  

Broadens Consumption Taxes (Modernizes Tax Code)

• Communications Services Tax
  - Establishes an across-the-board 7 percent tax on all telecommunications including cable, satellite and all phone services, which brings uniformity to telecom service providers.
  - Removes the telecom tax on capital investment, allowing for increased investment in broadband and wireless capacity which could bring more telecommunication access to rural areas.
  - Increases telecom capital investment and creates more job opportunities in Georgia.
  - North Carolina, Virginia and six other states have already implemented similar flat communication taxes.
  
  
• Casual Sales to Motor Vehicles, Boats and Planes
  - Georgia would join 44 other states that already tax casual sales.
  - Transfers among immediate family members will remain exempt.
  
  
• Automobile Repair Service
  - Georgia currently taxes parts on auto repair.
  - At least 21 other states tax automobile labor repair, including Florida and Tennessee, and this proposal calls for the same in Georgia.
  

   In addition, Georgia State University has provided a Policy Analysis on the estimated change in tax liability based on the current version of HB 387. The Cobb Chamber of Commerce is supportive of these broad concepts, but is still in a position of studying the legislation. It is more than likely that further revisions will take place in a Joint Committee meeting called late today. A final version could be voted on in the House of Representatives as early as tomorrow, Wednesday, March 30, with a possible floor vote in the Senate as early as Friday.

    We will keep you informed as this legislation moves forward.