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Senate putting its stamp on tax reforms

By Dave Williams

dave.williams@graypub.com

ATLANTA - The debate over tax reform in the General Assembly is coming down to a choice over which taxes to cut.

Senate Republican leaders trotted out a plan Tuesday to roll back state income taxes by 10 percent during the next five years, starting this July.

Senators argued that Georgians need a tax cut now to help them cope with a sluggish economy, while the House's proposal to abolish the car tax wouldn't take effect until July of next year.

"The economy will recover faster and grow further with an income tax cut than any other form of tax cut," said Senate President Pro Tempore Eric Johnson (R-Savannah).

The House passed the car-tax repeal last week, culminating a push for tax reform that Speaker Glenn Richardson (R-Hiram) began a year ago.

Subject to voter approval this November, it would be phased in over two years, saving taxpayers an estimated $672 million a year when fully implemented.

The income tax cut being touted by the Senate would start off saving taxpayers more than $200 million during the coming fiscal year and escalate to $1.2 billion a year beginning in fiscal 2013.

Beyond the fundamental difference over abolishing the car tax versus reducing income taxes, the House and Senate plans share some similarities.

Both chambers' leaders say they support Gov. Sonny Perdue's proposal to eliminate the state portion of property taxes, which would achieve an estimated savings of about $94 million a year.

Both plans call for freezing property assessments and placing caps on the future growth of assessments. Such limits would make it difficult for local governments to use reassessments as a "back-door" way to increase taxes without having to vote to raise millage rates.

However, each plan includes provisions not found in the other.

The Senate is pushing to put limits on annual increases in state tax revenues. House Republicans scrapped a similar proposal last week to gain enough support from Democrats to pass the measure.

The House plan includes a $10 car registration fee to fund a statewide trauma care network, while the Senate doesn't address trauma care.

House GOP leaders were decidedly cool Tuesday toward the Senate plan.

House Majority Leader Jerry Keen accused his Senate counterparts of hastily throwing together a proposal simply to have something to put up against the House plan.

"When the House took on comprehensive tax reform, it took two years, numerous public hearings and town hall meetings across the state," said Keen (R-St. Simons Island). "I'm not sure where this [Senate] plan was last summer, last fall or even the first two-thirds of this session."

But Lt. Gov. Casey Cagle, the Senate's presiding officer, said the upper chamber's timing is a result of the different role it plays in formulating tax policy.

"We cannot generate revenue bills constitutionally," he said. "We have to wait on the House."

The Senate Finance Committee will take up various aspects of the Senate tax reforms during the next two days.

The panel is expected to vote Thursday on the key provision rolling back income taxes.