It’s not often that Georgia’s two main think tanks for state politics, the Georgia Public Policy Foundation (GPPF) and the Georgia Budget and Policy Institute (GBPI), agree on an issue. But when it comes to tax credits, the two ideological opponents find themselves at a rare point of simpatico.
They come at it from different sides, but both groups are concerned the credits represent a corporate giveaway or corporate welfare.
Last week, the House Ways and Means Committee passed HB 586 and HB 587, the “Georgia Economic Recovery Act” and the “Georgia Economic Renewal Act of 2021” respectively. Both bills are contain a range of measures meant to boost the COVID and post-COVID economy in Georgia, several of those measures are tax credits.
One of the credits in HB 586 is particularly eye-catching, a sales and use tax exemption for repairs on large boats. Those “large boats” are defined as being valued at more than $500,000 and are owned by the select few of the select few. The credit has frequently been parodied for its application to only the wealthiest.
Asked if the boat/yacht repair bill represented a “race to the bottom” type of bill (where states compete with each other to lure business but ultimately end up paying out more than is being brought in), former House Ways and Means Committee Chair Brett Harrell said he thought this credit was worth it because of the business that has popped up around the direct repair work.
“I believe this was a race worth entering. Saving the .1% sales tax expense benefited many others. The Savannah Yacht Center did not exist in GA prior to this incentive,” said Harrell. “The Savannah Yacht Yard is an incredible capital investment, numerous high paying jobs, and generates non-yacht revenue for numerous other businesses (hotel, restaurant, etc).”
Both 586 and 587 will now be up for debate on the House floor.
Perhaps the most well-known tax credit, the Film Tax Credit, is also potentially up for reform this year. A Department of Audits report in January of last year found that the state’s economic development agency “significantly overstated” the number of jobs supported by the credit, while also missing how much of the credit goes to compensation paid to nonresident workers.
HB 441, sponsored by Rep. David Clark (R-98 Buford), would strip the credit completely. Besides being one of the most popular tax credits at the Gold Dome, Clark’s status as a perennial nemesis to Speaker David Ralston (R-7 Blue Ridge) adds to the slim to snowball’s chance in Hahira odds of the bill’s passage.
But there is increasing attention to reining in some of the credit’s provisions, including setting a new cap on credit eligibility and a more complete audit of qualifying productions.
As the state comes out of the COVID slowdown, there may be little appetite for eliminating credits and even less appetite for eliminating a bragging point for statewide officeholders for the past decade. But reform efforts are getting traction.
