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Wednesday, April 4, 2012 - 12:06pm

How The New Tax Bill Will Work

Passing a tax reform bill was one of the state legislature’s key accomplishments this year. Governor Nathan Deal plans to sign the bill, which will change how consumers buy cars and shop online.

Under the bill, retailers with Georgia stores will have to collect sales taxes on online purchases. That will affect about 10 percent of sales.

The bill will also change car taxes.

Alan Essig, who heads the Georgia Budget and Policy Institute, explains how it will work:

“Those who buy a new car and keep it for a long period of time will end up paying less in taxes over the life of the car than they are paying currently," he said. "Because what they’re doing now is they are paying a sales tax on the car and then they’re paying the ad valorem for the life of the car. So now they will pay the title fee, which is more or less the sales tax they were going to pay anyway. But then they will no longer have to pay the ad valorem on the car.”

The change will be phased in over the next decade. Drivers will keep paying the ad valorem tax until they sell their cars.

The bill will also waive the sales tax manufacturers pay on energy.

Supporters say that exemption will help spur new jobs, and counties looking to attract manufacturers will likely welcome the change.

But Alan Essig with the Georgia Budget and Policy Institute says officials in other counties will see it differently.

“Counties that right now have a large manufacturer in their county who are dependent on that sales tax revenue for a significant part of their county budget or their school district budget, some counties won’t be happy about that,” he said.

Counties that lose the revenue have the option of charging a two-percent excise tax to recoup the loss.

The 2012 legislative session ended last week. Lawmakers passed more than 200 major pieces of legislation and 300 local bills, and Gov. Deal has 40 days to sign them.

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