[March 23, 2012] | On Monday, March 19th, we returned to the Gold Dome to begin our 34th of 40 legislative day of the 2012 session. As the end of session draws near, we worked long hours this week to ensure the passage of vital legislation that will reform both our state?s tax code and criminal justice system.
Also known as the ?Georgia Jobs and Family Tax Reform Plan,? HB 386 implements a variety of tax reform measures that were recommended by the Special Council on Tax Reform and Fairness for Georgians. Consisting of 11 business leaders and economic experts, the council conducted an in-depth review of our current tax structure and submitted their recommendations just before we began last year?s legislative session.
During the summer two years ago, I attended many Tax Council meetings across the state. Citizens from all walks of life came to these meetings to tell us what we could do to improve our tax system in Georgia. I learned a lot attending those meetings. Since then, we have all had time to thoroughly review the findings of the Council and work together to develop what is called House Bill 386, which passed the House overwhelmingly this week. This tax reform will make our state friendlier to businesses and will help families as they recover from the economic downturn.
Among its many family-friendly tax reform components, HB 386 includes a measure that would eliminate the ?birthday tax,? an annual vehicle property tax (ad valorem) on cars, trucks and vans that is due on auto owners? birthdays each year. Instead of paying this annual tax and a state and local sales tax, people purchasing a new or used vehicle after March 1, 2013 would only pay a one time title fee equal to 6.5 percent of the car?s value. Although this change is not applicable to those currently paying the annual ?birthday tax? or to the annual tag fee, those who purchase a vehicle between now and February 2013 would have the option of choosing between the current system and the one-time title fee system. All vehicles purchased after March 1, 2013 would use the new title fee system.
In addition to eliminating the ?birthday tax,? HB 386 would also reduce the marriage penalty in the current Georgia income tax code. By increasing the personal exemption for married couples by $2,000 on joint income tax returns and $1,000 each on separate returns, HB 386 will eliminate an imbalance in the tax system that inadvertently punishes married couples with a higher tax rate. Under this change, couples filing with a ?Married Filing Joint? status will go from an exemption of $5,400 to an exemption of $7,400, and married couples that file separately will have an increase in each of their exemptions from $2,700 to $3,700.
HB 386 would also close a loophole in our tax code that currently provides out-of-state retailers a competitive advantage over in-state brick-and-mortar retailers that directly or indirectly employ more than 1,000,000 Georgians. Currently, all retail sales to Georgians, be they online or in store, are required to result in the collection and remittance of either a state sales or use tax. While brick-and-mortar retailers within the state must collect a sales tax at the time of the sale, their out-of-state counterparts do not. Instead, this burden is placed on their Georgia customers, who are required to remit the sales tax in the form of use tax, something many Georgians are not aware of even though it has been law since the 1950?s. HB 386 would end this disparate treatment that unfairly burdens in-state retailers by requiring out-of-state sellers to collect and pay the Georgia state sales tax if they have certain relationships with affiliates in Georgia, just like their in-state counterparts. Not only will this end an unfair tax policy that puts small businesses in Georgia at a disadvantage, but it will also stop incentivizing out-of-state retailers to keep their facilities and jobs out of Georgia.
HB 386 would reinstate the sales tax holidays on school supplies and energy efficient items for the next two years. These sales tax holidays would be nearly identical to tax holidays in previous years, which allowed Georgia shoppers to forgo paying sales tax on school supplies for a specified time in August and energy and water efficient products in October. This measure will help struggling families and keep Georgia businesses competitive with their counterparts in neighboring states.
While these measures will make a positive impact on the lives of Georgians across the state, they are not the only tax reform measures implemented in HB 386. Other policies - such as eliminating energy sales tax on manufacturers, allowing certain projects of regional significance to exempt construction materials from the state sales tax and lowering the state tax on aviation fuel - will make Georgia a more attractive environment for businesses, which ultimately provides more jobs for Georgians. The legislation also revises Georgia?s patchwork of agricultural tax exemptions into three broad input exemptions that would ensure fairness and consistency within Georgia?s number one industry. Additionally, it would eliminate the sales tax exemption on goods used for film production, cap the retirement income exclusion for seniors, and limit a tax credit for land conservation easements. Together, these tax reforms create a comprehensive shift in Georgia?s tax policy, which will create a modern tax code that benefits families and levels the playing field for businesses that create jobs for Georgians. I am pleased that my colleagues showed overwhelming support for this measure, and hope that Governor Deal will approve these measures soon.
In addition to passing tax reform legislation, we also made a great milestone in criminal justice reform by passing House Bill 1176 this week. Since 1990, Georgia?s prison population has more than doubled to nearly 56,000 inmates, costing the state over $1 billion annually. Despite this growth, Georgia taxpayers have not received a sufficient public safety return on their corrections dollars. In fact, our recidivism rate ? the proportion of inmates who are reconvicted within three years of release ? has held steady at nearly 30 percent for the past decade.
Aware of the problems in Georgia?s criminal justice system, the Georgia Supreme Court, Governor Deal, and the Georgia General Assembly worked together last year to create the Special Council on Criminal Justice Reform for Georgians. This bi-partisan council conducted an in-depth analysis of the state?s sentencing and corrections data to determine how the state can better utilize taxpayers? dollars in keeping dangerous criminals off the street.
The council found that 60 percent of all prison admissions were drug and property offenders, many of which committed non-violent crimes and had never before been to prison. With each of these offenders costing the state $49 a day in prison, it became apparent that other community-based options, such as Day Reporting Centers that cost $16 a day per offender, might be a more efficient and cost-effective method for supervising non-violent offenders. This is especially true when you consider the fact that our prisons are filled with drug addicts caught in a cycle of petty crime to support their habit followed by short stints in prison where rehabilitation is not offered. Rather than perpetuate this perpetual problem, we could break the cycle through low-cost community-based rehabilitation. Unfortunately, few judges in our state currently have viable sentencing options other than prison.
To change this, HB 1176 would concentrate prison space on violent and career criminals by enhancing penalties for some serious offenders and more effectively punishing low-level drug users and property offenders. It also creates tougher, more effective probation supervision; improves community-based sentencing options, such as accountability courts, that reduce recidivism; and holds agencies accountable for better results through data collection and performance measurement systems. This bill will NOT reduce the sentences for any serious violent felonies or decriminalize or legalize any controlled substance.
The reforms implemented by HB 1176 will truly allow Georgians to rest assured that their tax dollars are being spent on an efficient criminal justice system without sacrificing public safety. By redirecting some of the money we spend incarcerating low-risk, non-violent offenders with substance abuse problems toward more effective community-based options that cost less and produce better outcomes, we will make all of Georgia?s communities safer. Moreover, the measures included in this legislation will save taxpayers an estimated $264 million by averting projected growth in prison costs over the next five years.
In addition to passing criminal justice and tax reform legislation, this week we also passed an adjournment calendar, which states that our last legislative day of the 2012 session will be Thursday, March 29, 2012. Also known as Sine Die, this 40th and final legislative day will be our last opportunity to pass state legislation this year. As we approach our last legislative week of the 2012 session, I encourage you to contact me with any concerns you might have regarding our state and its agencies. You can reach me at my state Capitol office at 404-656-0188 or through email at rick.jasperse@house.ga.gov.
Thank you for allowing me to serve as your Representative.