Mon., April 11, 2011 12:58pm (EDT)

New Version of Tax Overhaul Heads to House Vote
By Jeanne Bonner
Updated: 3 years ago

ATLANTA  —  
A tax reform plan that would create a $141 million hole in the 2012 state budget is headed to the House floor for a vote today.

A joint committee on tax reform passed the plan at a committee meeting this morning. It’s the third version of the tax plan in as many weeks. The plan would reduce the state income tax rate for nearly all Georgians while adding taxes on telecommunication services and auto repair.

By reducing the income tax, the state will forfeit $141 million in tax collection revenue that would have been owed to it, state legislators said.

Republican leaders say the tax reform plan will make Georgia more competitive with Tennessee and Florida, which don’t have any income tax. And they believe state revenue collections will increase during the rest of the year to backfill the funding gap.

Senate President Pro Tempore Tommie Williams, a Republican, said he does not think the state will have to further cut services to make up for the loss in revenue.

“We’re one of the lowest tax states in the nation,” he said after the committee meeting. “We are extremely frugal with our money. We made some difficult decisions that frankly Washington needs to be making. They should look to Georgia on how to balance a budget. We are going to balance in the end, and I’m not at all worried the revenue won’t be there when it comes time.”

Critics say without an infusion of new revenue, the state may have to cut more services. Republican leaders rejected a suggestion by a tax council that they reinstate the grocery sales tax.

Minority Leader, Rep. Stacey Abrams, said state tax collections are up, but it’s unclear what will happen the rest of the year. She said it's inevitable that some additional cuts will have to be made.

“It’s a $141 million deficit to our bottom line,” Abrams, an Atlanta Democrat, said. “We have gone past the point of cutting extraneous services. We are cutting into the crime labs, the school buses, infrastructure.”

The state House will reconvene at 1 p.m. today when it’s expected to start debating the tax reform bill. GOP leaders hope to pass a tax reform before the legislative session ends on Thursday.