Senate passes Ga. tax break bill; goes to governor

Published 6:43 am Friday, March 23, 2012

Legislation on its way to Gov. Deal that phases out over four years the sales tax that manufacturing pays on energy used to produce its goods is “certainly good news for our employers, and hopefully an opportunity for us not only to save but create new jobs,” state Sen. Charlie Bethel, R-Dalton, said Thursday.

Bethel noted the legislation, which includes a number of provisions including cuts in taxes for the state’s married couples and gradual repeal of the property tax on motor vehicles, passed the Senate 54-0. Deal has expressed support for it.

“This was really a welcome sort of bipartisan moment on saying that we think it’s time to work to ease the tax burden on Georgians and get Georgians back to work the best we can,” Bethel said.

Local industry leaders said repeal of the energy tax was one of their top priorities when a  commission studying overhauling the state’s tax system met in Dalton in 2010. Greater Dalton Chamber of Commerce President Brian Anderson said then that in Whitfield County alone energy taxes cost businesses $10 million a year.

Bethel said with the move to phase out the tax Georgia “will join all of our sister states and most of the states we compete with in the manufacturing world …”

He said it will take time, of course, to see some benefits if the governor signs the legislation, because “capital investment, buying machinery and building new facilities and choosing whether to relocate away from our area or stay in our area, those aren’t overnight decisions.

“But it certainly makes us more competitive. As people look at that — they’re buying assets for 20 years and more in terms of their useful life — the notion that we’re phasing this out will certainly be attractive.”

And, Bethel said, “I hope that if nothing else it will be some immediate relief to a lot of the folks who are currently in the manufacturing sector that have been suffering for the last several years under very tough conditions, and this will at least be a signal that some element of help is on the way.”

Under the legislation, married couples would see a $2,000 increase in the amount of income they can keep away from the state’s income tax.

“Right now, you’re tax disadvantaged if you’re married under a quirk of the income tax law,” Bethel said, “and we will be reducing that penalty, as it were, on married Georgians. Certainly it’s relief that has been wanted and should move us in a positive direction.”

The “birthday tax,” as Bethel said the annual property tax on motor vehicles is “not affectionately called down around the Capitol,” would also be slowly phased out under the legislation. Individuals who buy new or used cars or trucks after March 1, 2013, would pay a one-time tax that maxes out at 7 percent. Such individuals would no longer receive an annual property tax bill based on the value of their vehicle. Individuals who keep their car or trucks past that date would have to continue paying the annual tax until they purchase a new vehicle.

“It will take some time to get this accomplished as we transition from systems,” Bethel said. “But … we are going into a model that will allow us to assess a fee, or a tax — it’s the same thing, it’s money out of your pocket — on the transfer of title, and have that be a one-time charge any time the title’s transferred on a vehicle. But as long as you hold a vehicle and you own it, you won’t have to pay ad valorem tax on it year after year.”

Bethel said the legislation includes a number of other provisions “eliminating or reducing taxes on agriculture and mining in Georgia, and the purchase of heavy equipment in those endeavors. Again, the idea is to stimulate capital investment and related employment in Georgia.”

Budget officials estimate the tax breaks will create a $49 million deficit next year, less than 1 percent of the state budget.

The Associated Press contributed to this report.

=======