Georgia Lawmakers Say Tax-Credit Audit, Tobacco Tax Hike Could Deepen State Coffers

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by Nyamekye Daniel

 

 

State leaders and economists believe Georgia’s fiscal outlook is promising despite the economic strain from the COVID-19 pandemic, but some lawmakers say the state can do more to secure additional revenue.

Sens. Chuck Hufstetler, R-Rome; Jen Jordan, D-Atlanta; and House Minority Leader James Beverly, D-Macon, said the state needs to re-evaluate its tax incentive programs to eliminate waste and ensure tax equity.

“I am not against tax credits. I am not against offering tax incentives for businesses to come here or whatever, but it has to make sense at the end of the day,” Jordan said during a recent Georgia Budget Policy Institute forum.

Georgia’s economy is operating at 89% of where it was in early March, before the pandemic, according to Moody’s Analytics and CNN Business’ Back-to-Normal Index. December’s net tax collections in Georgia were up 7.7% compared with December 2019. Fiscal-year-to-date collections are up 6.1%.

State economist Jeffrey Dorfman attributed the state’s financial resilience to federal aid and a strong and flexible job and business force. Uncertainty still looms, however, and tax refunds are expected to be higher this tax year, Dorfman said.

Jordan said Georgia needs to find ways to increase the “pie,” and a good return on its investments is pivotal to the state’s recovery.

“We are facing some pretty significant problems and issues in this state that are going to require a significant amount of investment going forward,” Jordan said.

Critics of tax credits also argue they allow the government pick winners and losers. Jordan said everyone needs to be paying their fair share of taxes.

Hufstetler said the state offers $9.5 billion in tax incentives with minimum oversight. Tax credits in Georgia range from economic development and job credits to entertainment credits. Hufstetler, who heads the Senate Finance Committee, said he plans to propose legislation to evaluate five of the state’s tax incentive programs and launch a two-year study on tax credits.

“Some [tax credits], I think are worthy. I think many of them are not,” Hufstetler said. “But when you collect $14 billion in income tax, and you’re giving away $9.5 billion, you might have a chance to have more revenue and, perhaps, have everybody have a better tax rate at the same time. So we’ve got to work on that.”

Gov. Brian Kemp directed state agencies last year to reduce spending by 10%. His Amended Fiscal Year (AFY) budget restores $650 million from the original proposal, mostly reallocated to K-12 schools. Kemp has proposed redirecting funds in public safety and additional funding for public health. Budget writers must decide how much to spend on new vehicles for law enforcement and state agencies and new spending limits for the state’s Medicaid program, among other things.

Jordan and Beverly consistently have pushed for driving more revenue from Georgia’s tobacco tax. Georgia’s tobacco tax ranks 50th in the nation, according to the Georgia Budget Policy Institute. State fiscal analysts estimate Georgia could generate nearly $700 million next year by raising the tax closer to the national average. The GPBI also wagers that reducing smoking could lead to positive health outcomes and decrease Medicaid spending.

House budget writers are reviewing their version of the Amended Fiscal Year Budget. It is expected to be discussed Wednesday in the House Appropriations Committee.

Georgia’s economy is operating at 89% of where it was in early March, before the pandemic, according to Moody’s Analytics and CNN Business’ Back-to-Normal Index. December’s net tax collections in Georgia were up 7.7% compared with December 2019. Fiscal-year-to-date collections are up 6.1%.

State economist Jeffrey Dorfman attributed the state’s financial resilience to federal aid and a strong and flexible job and business force. Uncertainty still looms, however, and tax refunds are expected to be higher this tax year, Dorfman said.

Jordan said Georgia needs to find ways to increase the “pie,” and a good return on its investments is pivotal to the state’s recovery.

“We are facing some pretty significant problems and issues in this state that are going to require a significant amount of investment going forward,” Jordan said.

Critics of tax credits also argue they allow the government pick winners and losers. Jordan said everyone needs to be paying their fair share of taxes.

Hufstetler said the state offers $9.5 billion in tax incentives with minimum oversight. Tax credits in Georgia range from economic development and job credits to entertainment credits. Hufstetler, who heads the Senate Finance Committee, said he plans to propose legislation to evaluate five of the state’s tax incentive programs and launch a two-year study on tax credits.

“Some [tax credits], I think are worthy. I think many of them are not,” Hufstetler said. “But when you collect $14 billion in income tax, and you’re giving away $9.5 billion, you might have a chance to have more revenue and, perhaps, have everybody have a better tax rate at the same time. So we’ve got to work on that.”

Gov. Brian Kemp directed state agencies last year to reduce spending by 10%. His Amended Fiscal Year (AFY) budget restores $650 million from the original proposal, mostly reallocated to K-12 schools. Kemp has proposed redirecting funds in public safety and additional funding for public health. Budget writers must decide how much to spend on new vehicles for law enforcement and state agencies and new spending limits for the state’s Medicaid program, among other things.

Jordan and Beverly consistently have pushed for driving more revenue from Georgia’s tobacco tax. Georgia’s tobacco tax ranks 50th in the nation, according to the Georgia Budget Policy Institute. State fiscal analysts estimate Georgia could generate nearly $700 million next year by raising the tax closer to the national average. The GPBI also wagers that reducing smoking could lead to positive health outcomes and decrease Medicaid spending.

House budget writers are reviewing their version of the Amended Fiscal Year Budget. It is expected to be discussed Wednesday in the House Appropriations Committee.

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Nyamekye Daniel has been a journalist for four years. She was the managing editor for the South Florida Media Network and a staff writer for The Miami Times. Daniel’s work has also appeared in the Sun-Sentinel, Miami Herald and The New York Times. Daniel is a staff reporter for The Center Square.
Background Photo “Georgia Capitol” by DXR. CC BY-SA 4.0.

 

 

 

 

 

 

 

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