On Monday, March
19th, we returned to the Gold Dome to begin our 34th legislative day
of the 2012 session. As the end of
session draws near, we worked long hours this week to ensure the passage of vital
legislation that will reform both our state’s tax code and criminal justice
system.
Also known as the
Georgia Jobs and Family Tax Reform Plan, HB 386 implements a variety of tax
reform measures that were recommended by the Special Council on Tax Reform and
Fairness for Georgians. Consisting of 11
business leaders and economic experts, the council conducted an in-depth review
of our current tax structure and submitted their recommendations just before we
began last year’s legislative session. In
the 15 months since then, we have had time to thoroughly review the findings of
the council and develop what is called the Georgia Jobs and Family Tax Reform
Plan into House Bill 386, which passed the House this week. This reform will change the way Georgia
collects revenue, making our state friendlier to businesses and helping
families as they recover from the economic downturn.
Among its many
family-friendly tax reform components, HB 386 includes a measure that would
eliminate the “birthday tax,” an annual vehicle property tax on cars, trucks
and vans that is due on auto owners’ birthdays each year. Instead of paying this annual tax and a state
and local sales tax, people purchasing a new or used vehicle after March 1,
2013 would only pay a one time title fee equal to 6.5 percent of the car’s
value. Although this change is not
applicable to those currently paying the annual “birthday tax,” those who
purchase a vehicle between now and February 2013 would have the option of
choosing between the current system and the one-time title fee system. All vehicles purchased after March 1, 2013
would use the new title fee system.
In addition to
eliminating the “birthday tax,” HB 386 would also reduce the marriage penalty
in the current Georgia
income tax code. By increasing the
personal exemption for married couples by $2,000 on joint income tax returns
and $1,000 each on separate return, HB 386 will eliminate an imbalance in the
tax system that inadvertently punishes married couples with a higher tax rate.
Under this change, couples filing with a “Married Filing Joint” status will go
from an exemption of $5,400 to an exemption of $7,400, and married couples that
file separately will have an increase in each of their exemptions from $2,700
to $3,700.
HB 386 would also close
a loophole in our tax code that currently provides out of state retailers a
competitive advantage over in-state brick and mortar retailers that directly or
indirectly employ more than 1,000,000 Georgians. Currently, all retail sales to Georgians, be
they online or in store, are required to result in the collection and
remittance of either a state sales or use tax.
While brick and mortar retailers within the state must collect a sales
tax at the time of the sale, their out-of-state counterparts do not. Instead, this burden is placed on their Georgia customers,
who are required to remit the sales tax in the form of use tax, something many
Georgians are not aware of even though it has been law since the 1950’s. HB 386 would end this disparate treatment that
unfairly burdens in-state retailers by requiring out-of-state sellers to
collect and pay the Georgia
state sales tax if they have certain relationships with affiliates in Georgia, just
like their in-state counterparts. Not
only will this end an unfair tax policy that puts small businesses in Georgia at a disadvantage, but it will also stop
incentivizing out-of-state retailers to keep their facilities and jobs out of Georgia.
Finally, HB 386
would reinstate the sales tax holidays on school supplies and energy efficient
items for the next two years. These
sales tax holidays would be nearly identical to tax holidays in previous years,
which allowed Georgia
shoppers to forgo paying sales tax on school supplies for a specified time in
August and energy and water efficient products in October. This measure will help struggling families
and keep Georgia
businesses competitive with their counterparts in neighboring states.
While these
measures will make a positive impact on the lives of Georgians across the
state, they are not the only tax reform measures implemented in HB 386. Other policies - such as eliminating energy
sales tax on manufacturers, allowing certain projects of regional significance
to exempt construction materials from the state sales tax and lowering the
state tax on aviation fuel - will make Georgia a more attractive
environment for businesses, which ultimately provides more jobs for
Georgians. The legislation also revises Georgia’s patchwork of agricultural tax
exemptions into three broad input exemptions that would ensure fairness and consistency
within Georgia’s
number one industry. Additionally, it
would eliminate the sales tax exemption on goods used for film production, cap
the retirement income exclusion for seniors, and limit a tax credit for land
conservation easements. Together, these
tax reforms create a comprehensive shift in Georgia’s tax policy, which will
create a modern tax code that benefits families and levels the playing field
for businesses that create jobs for Georgians.
I am pleased that my colleagues showed overwhelming support for this
measure, and hope that Governor Deal will approve these measures soon.
In addition to
passing tax reform legislation, we also made a great milestone in criminal
justice reform by passing House Bill 1176 this week. Since 1990, Georgia’s prison population has
more than doubled to nearly 56,000 inmates, costing the state over $1 billion
annually. Despite this growth, Georgia
taxpayers have not received a sufficient public safety return on their
corrections dollars. In fact, our recidivism
rate – the proportion of inmates who are re-convicted within three years of
release – has held steady at nearly 30 percent for the past decade.
Aware of the
problems in Georgia’s
criminal justice system, the Georgia Supreme Court, Governor Deal, and the
Georgia General Assembly worked together last year to create the Special
Council on Criminal Justice Reform for Georgians. This bi-partisan council conducted an
in-depth analysis of the state’s sentencing and corrections data to determine
how the state can better utilize taxpayers’ dollars in keeping dangerous
criminals off the street.
The council found
that 60 percent of all prison admissions were drug and property offenders, many
of which committed non-violent crimes and had never been to prison before. With each of these offenders costing the
state $49 a day in prison, it became apparent that other community-based
options, such as Day Reporting Centers that cost $16 a day per offender, might
be a more efficient and cost-effective method for supervising non-violent
offenders. This is especially true when
you consider the fact that our prisons are filled with drug addicts caught in a
cycle of petty crime to support their habit followed by short stints in prison where
rehabilitation is not offered. Rather
than perpetuate this perpetual problem, we could break the cycle through low
cost community-based rehabilitation. Unfortunately,
few judges in our state currently have viable sentencing options other than
prison.
To change this, HB
1176 would concentrate prison space on violent and career criminals by
enhancing penalties for some serious offenders and more effectively punishing
low-level drug users and property offenders.
It also creates tougher, more effective probation supervision; improves
community-based sentencing options, such as accountability courts, that reduce
recidivism; and holds agencies accountable for better results through data
collection and performance measurement systems.
This bill will NOT reduce the sentences for any serious violent felonies
or decriminalize or legalize any controlled substance.
The reforms
implemented by HB 1176 will truly allow Georgians to rest assured that their
tax dollars are being spent on an efficient criminal justice system without
sacrificing public safety. By
redirecting some of the money we spend incarcerating low-risk, non-violent
offenders with substance abuse problems toward more effective community-based
options that cost less and produce better outcomes, we will make all of
Georgia’s communities safer. Moreover, the
measures included in this legislation will save taxpayers an estimated $264
million by averting projected growth in prison costs over the next five years.
In addition to
passing criminal justice and tax reform legislation, this week we also passed
an adjournment calendar, which states that our last legislative day of the 2012
session will be Thursday, March 29, 2012.
Also known as Sine Die, this 40th and final legislative day
will be our last opportunity to pass state legislation this year. As we approach our last legislative week of
the 2012 session, I encourage you to contact me with any concerns you might
have regarding our state and its agencies.
You can reach me at my state Capitol office at 404-656-0126 or through
email at emory.dunahoo@house.ga.gov.
Thank you for
allowing me to serve as your representative.
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