Opposition surfaced Tuesday to subjecting groceries to the state sales tax, a likely flash point in the House leadership’s massive tax reform bill.
“I have a real problem with adding the state sales tax on groceries,” Rep. Stacey Evans, D-Smyrna, told InsiderAdvantage Georgia. “That will disproportionately affect our poor families. They just can’t afford it.”
Rep. John Carson, R-Marietta, introduced his 81-page “More Take Home Pay Act” Monday. House Bill 445 would lower the state income tax rate from 6 to 4 percent over three years. The rate would fall to 4.5 percent in 2016, 4.25 percent the next year and 4 percent in 2018. The state sales tax would rise from 4 percent to 5 percent on Jan. 1, 2017.
The state sales tax increase would join a local sales tax hike now included in the separate legislation designed to raise about $1 billion more annually in state transportation funds. House Bill 170 would allow municipal governments and school boards to raise certain sales taxes from 1 percent to 1.25 percent, not including gasoline.
Extending the sales tax to groceries would be phased in, beginning at 3 percent in 2017 and increasing by 1 percent a year until reaching 5 percent in 2019. Each 1 percent bump would add $130 million to the state budget, according to a fact sheet from Carson.
But Evans said that would cost Georgia’s working families too much. While Carson said a family of four making $48,000 a year would save $400 annually under the income tax decrease, Evans said they would pay more than that in the grocery sales tax.
Carson’s bill would raise the cigarette excise tax from the present 32 cents per pack to 65 cents. The tax would rise to 45 cents in 2017, 55 cents in 2018 and the full 65 cents in 2019. Raising the cigarette sales tax has gained attention this session, with proponents seeing it as a way to replace general fund revenues from the loss of the so-called fourth penny of the gasoline sales tax, shifted to transportation under HB 170. Physicians’ groups and other health organizations have called for a $1.32 a pack increase.
HB 445 would also eliminate a number of tax exemptions, including Delta Air Lines’ break on aviation fuel purchases.Tax credits for child and elderly care and adopting foster children would also be removed. However, other tax breaks would be preserved, including those for the state’s film industry. The bill would also eliminate tiered income tax brackets, creating a flat rate structure.
In other action Tuesday, the House Rules Committee sent the transportation spending bill back to the Transportation Committee, which approved a version of the proposal last week. The action apparently was taken so that an amendment could be added to draw support of the Association County Commissioners of Georgia and the Georgia Municipal Association. The Transportation Committee is expected to re-consider the bill this week.
The county commissioners group backed a previous version of the bill, but withdrew its support when the revised bill removed diesel fuel from the local tax base. The GMA and the Georgia School Boards Association opposed a section that broadened the counties’ authority over transportation.
