Georgia House Speaker Glenn Richardson's plan to repeal all Georgia property taxes and make up the lost revenue by expanding the state and local sales tax base ran into a roadblock last week. Two new reports from Georgia State University's Fiscal Research Center (FRC) show that repealing property taxes would dig an annual $8.6 billion budget hole for the state -- and that under any reasonable scenario for expanding the sales tax base, a property-for-sales tax swap would fall at least $2 billion short of filling that hole. Since Richardson has described his plan as "revenue neutral" without actually providing detailed revenue estimates, the new reports cast doubt on whether this tax swap can be accomplished.
As the FRC report's detailed revenue estimates make clear, the only way such a plan could even approach revenue neutrality would be to tax items that (to put it mildly) wouldn't find much support among the public or tax analysts, including purchases by the federal, state and local government ($2.2 billion), health care ($600 million), and rent ($405 million).
Richardson helpfully suggested this week that the authors of the reports "should sharpen their pencils," but didn't offer more substantive criticism of the FRC analysis.
Even worse for advocates of this tax swap, the latest data show that Georgia sales tax collections in September were down 10% from last September's collections, which is not a good sign for those who want to use sales taxes to pay for property tax repeal.