For many tax justice advocates, Georgia has been a state to watch. House Speaker Glenn Richardson's "Georgia Repeal of Every Ad Valorem Tax" (GREAT) Plan, which would have repealed the state's property tax and replace the lost revenues by expanding the state's sales tax base, appeared to be doomed to fail this legislative session. The Plan faced numerous political road blocks and would have caused an $8.6 billion budget hole for the state according to Georgia State University's Fiscal Research Center. Yet there were many remaining questions regarding how much political capital the Speaker was willing to invest to make his plan a reality. Seeing the writing on the wall, the Speaker is now moving full speed ahead with a Plan-B.
His new proposal would eliminate just the state portion of the property tax in favor of an expanded sales tax base. The legislation also includes a troubling property assessment cap. (Residential assessed values will only be allowed to increase by 2 percent annually.)
A new report from the Georgia Budget and Policy Institute (GBPI) explains the problems with the legislation, which would create a budget shortfall of $827 million and increase the regressivity of the state's tax structure. In an Atlanta Journal-Constitution op-ed, GBPI executive director Alan Essig writes, "Low- to middle-income Georgians already pay a higher percentage of their income in state and local taxes. Swapping property taxes for more sales taxes will only make it worse." He goes on to plead for a reasoned approach to property tax reform while simultaneously making the case for investment in public services. "The speaker's proposals won't keep Georgia moving forward. In fact, his risky ideas for reform would set the state back for generations. What we need is a reasoned plan for reform that adds up and provides adequate revenue while putting in place a fair tax system for all Georgians." We couldn't agree more.