" It was reported in the Atlanta media that state representatives applauded last week when it was announced they had voted to do away with the tax Georgians pay on road vehicles.
By their applause, state reps were celebrating their purchase of a full-fledged lemon, sold by a house speaker anxious to prove his bravado as a tax reformer.
Before we get this clunker idea home, approval by the state senate and by all Georgians at the polls this November is required. Hopefully the other house and voters will read the fine print first.
Elimination of the tag tax is expected to wipe out about $750 million in state revenue next year. Nowhere has anyone identified a sensible spot where a corresponding $750 million in state expenditures can be trimmed. Lawmakers would have deserved their self-congratulatory applause, if they had first managed to trim $750 million in state spending and then offered a tax cut.
But that is far from the case here. As both the governor and lieutenant governor point out, House Speaker Glenn Richardson was desperately seeking some tax to cut without due consideration of how reduced revenues would play out.
Rep. David Lucas, one of the few in the house to see this sucker deal for what it is, said, “You’ve got to fund state government, and state government runs off money, not water.”
While some will argue that if you cut available tax revenue, you force the government to cut spending, that rarely turns out to be the case.
By this tax elimination, you won’t see less spending; you’ll see state spending shifted onto counties and school boards. You’ll see county residents making up the difference through upped local property taxes.
In this case, state lawmakers have indicated that shortfalls caused by loss of the car tag tax will be subtracted from state education funding––maybe the worst place to shift the burden in counties like ours where the growing student population already strains coffers.
Pity the school board as, barring some magic state plan, they will likely have to raise local property taxes to offset the loss of the car tag tax.
The state has axed a tax before: the sales tax on groceries. But that was in a time of economic growth. In this present instance, we see a government happy to cut even as it faces reduced revenues from slower growth – a poor financial decision.
And there is the issue of fairness with any shift away from car tags to other funding sources. The auto-tag tax is a fair one, based on the amount car owners shell out for their rides. Folks on fixed incomes can buy cheaper, older cars. Sports with higher incomes shoulder more tax burden when they roll out in their BMW’s.
How this tax could really become unfair for places like Pickens is if the state compensates counties for lost tag revenue. In Pickens we have a much lower millage rate than in metro counties, so every car-driving taxpayer here pays less for a tag than the same car-driving taxpayer in Fulton, Cobb or other metro counties.
All Georgians pay the same rate to the state on property tax and state sales taxes. Redistribute those state funds to compensate for lost car tag revenue, and counties with lower millage rates for car tags now won’t receive as much of a pay back.
It’s hard to turn down elimination of the car tag tax, because given a chance to vote away any tax, it’s just hard to say no.
But look twice under the hood on this deal. Something there just isn’t right.
Or as Governor Perdue noted, “People love to vote for tax cuts. It’s much tougher to balance a budget and talk about where the tax cuts come from.”
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