GREAT Tax Plan is Dead

The GREAT plan is dead. House Speaker Glenn Richardson’s legislative plan to revamp Georgia’s tax system by eliminating property taxes in favor of sales taxes on everything from legal advice to consumed goods has been pulled from potential consideration by the author.

The Rasputin-like HR 900 has undergone many incarnations since Richardson first introduced it late last spring. In recent days, through the committee hearing process, Richardson pulled back from reinstituting a statewide tax on groceries.

Richardson said Georgia’s tax system is antiquated and in need of an over-haul. The measure he introduced originally included a flat tax and an eradication of other taxes such as property tax and the ad valorem tax paid on automobiles.
HR 900 was very controversial, particularly among city, county and school officials who believed it not only interfered with local control, but raided local budgets.

“Our unique situation [in Johns Creek] is we already have a limit on our tax rate cap, so any effort to further restrict that is problematic,” said Johns Creek City Councilwoman Liz Hausmann. “We need to be able to address the needs of our community.”

Hausmann, who serves on the Georgia Municipal Association’s (GMA) legislative committee, said she could not support any measure with a revenue cap because of how Johns Creek’s city charter is written.

GMA has opposed Richardson’s GREAT plan, saying it limits local government’s revenue and decision-making by eliminating its most reliable revenue source.

Last week, Georgia Democrats announced opposition to the tax overhaul, which created a significant problem since the resolution would require a super-majority vote of 120 House votes in order to pass.

“Democrats are really proud that we stood up and we were able to protect the people of Georgia from this tax plan that would have created 175 new taxes on everything from DVDs to movie tickets to haircuts,” said Martin Methany, communications director for the Georgia Democratic Party.

Richardson’s retreat averts what would likely have been a floor defeat, dealing a significant blow to him and Republicans. The bill had made its way out of committee and the powerful House Rules Committee, but the prognostication was “dead on arrival” for a lack of votes and Richardson announced his decision to withdraw the measure during a morning Republican Caucus meeting.

“He may not have wanted to risk the embarrassment,” said Larry Pellegrini, executive director for the Georgia Rural Urban Summit, a coalition of progressive non-profit organizations from around the state.

“Most representatives fully realized this would not help the ordinary people of this state,” he said.

But Pellegrini said no bill is ever truly dead and said Richardson has been trying many different versions of tax reform.

On Wednesday, two bills are expected to come to the House floor that will offer some tax relief to Georgians.

Speaker Pro Tem Mark Burkhlater (R-Johns Creek) is expected to introduce his “birthday tax” bill, a measure that would eliminate the collection of ad valorem taxes on personal vehicles, including cars, trucks and motorcycles. As most Georgians know, each year a tax on their ad valorem property comes due on their birthday.

The new proposal may include a 2 percent cap on property taxes, which could still be controversial on an otherwise wildly popular measure.

Burkhalter’s bill, expected to be embraced by Richardson, will be phased in over two years. Fifty percent of taxes will be eliminated in 2010, an estimated $329 million, with the balance eliminated in 2011. If passed, the measure will come before Georgia voters on the November ballot.

Georgia’s State Senators are taking a wait and see approach before fully weighing in on the House measure.

Senate President Pro Tem Eric Johnson (R-Savannah) said opposition from local leaders could be a problem for any measure that comes before the Senate.

"I'm not sure a tax freeze bill gets two-thirds vote [in the Senate] with the millage cap they've put on it," he told reporters after the GREAT plan emerged from committee.

"The GREAT plan started changing every couple months, then it started changing every couple weeks, then every day, now it's changing by the hour. I don't see any need for the Senate to comment on it 'til it gets off the floor, because it'll probably change some more on the floor,” Johnson said.

Locally, Hausmann said she would delighted to see the elimination of the ad valorem tax.