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The Tax Reform Council (TRC) has done a pretty good job overall. Lots of thought and research has resulted in a chance for a broader revenue structure for Georgia, often supporting ideas which have long been sought by business people, advocates and economists alike. Taxing services and the casual sales of cars, aircraft, and boats, and sun-setting many tax exemptions (realizing that most would be reviewed and reinstated and others, not) are a few such ideas.

One proposal, however, which would add a 4% state sales tax on groceries, troubles a number of advocacy groups, including Voices. First let me say that we are aware that this tax could bring in a significant amount of revenue to our hurting state – to the tune of about $500 Million per year. Unfortunately, that tax also would weigh heavily on those who bring home smaller paychecks, pulling a considerable percentage of money out of their earnings to pay for necessities – namely food – for their children and family members.

But we need the revenues, right? Right. So rather than use a regressive tax such as the grocery tax, consider the idea, borne out of the 2020 Georgia tax reform coalition, of lowering the state income tax from 6% to 4.5%, rather than the 4% proposed by the TRC. Such a move would fill the revenue gap nicely, and address the inequity dilemma. There are many families in Georgia for whom even $150 per year lost to a grocery tax could mean the difference between paying a power bill, buying healthier foods, or covering a co-pay at the doctor’s office. Kids need good shelter, good nutrition and good health. Increasing the financial challenge on essential (food) items is not the way to encourage that scenario.

We have all been waiting with baited breath to see what legislation is going to emerge from the Tax Reform Council’s (TRC) recently published recommendations. Today, the legislative committee that will make those decisions will meet at the Capitol, I presume to start to hammer out a bill, which is ultimately to be voted up or down as a whole by the Chambers. That said, I plan to make the next couple of Blogs about our take on parts of the TRC’s recommendations.

First, I’d like to address the proposal to increase the State Tobacco Excise Tax. The TRC proposes to increase the cigarette tax by a mere $0.31/pack, with an index for inflation for future years. While we applaud the desire to increase the tax on this product, $0.31 is not nearly enough to deter smoking by kids or adults. The Council argues that it is “mindful of the importance of business in our border communities and therefore recommends keeping the rate competitive with neighboring states.”

Remember that quote and read these statistics from the American Cancer Society:
• 90 % of adult smokers started before they were 18 years old;
• For every 10% increase in the price of cigarettes, there is a 6% reduction in use by kids;
• $1/pack tax increase would prevent about 71,000 kids from starting to smoke; and
• Save the state Medicaid program almost $485 million over 5 years

Now see if you can answer this:
Why do we want to be “competitive” when selling products which irrefutably cause cancer and drive up healthcare costs?

Today, Legislative Day 3, was what many consider the “first work day” for state lawmakers. No special ceremonies or speeches; no snow or ice. Overall, Georgia House and Senate committees are just getting warmed up, having organizational meetings and starting to examine agency budgets in a little more detail than perhaps they did last week during the FY11/FY12 budget hearings. That said, I think today is an opportune time to discuss a sizeable federal issue which cold affect kids right here at home: Federal budget proposals.

This week, Congressmen and women will vote on a resolution (H. Res 38) reducing federal spending to 2008 levels. This approach exempts defense spending. On the other hand, education, health, nutrition, and child welfare services would sustain significant reductions. For example, in this proposal, dollars going to children in special education grants would be cut by 53 percent. Head Start would be cut by 27 percent. Adoption incentives would be slashed by 89 percent. Yet, discussion on how to raise revenues has been surprisingly absent.

Another proposal by the Republican Study Committee would have Congress reduce spending to 2006 spending levels. This amounts to a $2.5 trillion cut over 10 years. It would even rescind any remaining stimulus money, as well as the bump in Medicaid support passed just last summer.

We believe that children are important to all of Georgia’s lawmakers. That said, if one of these resolutions were to pass, how would states like Georgia make up the difference in lost federal dollars?


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August 2020