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Last week, the Senate unanimously passed HB 386, a comprehensive tax reform package which is the culmination of two years of hard work from state legislators and economists. This pro-business legislation helps to create a revenue-neutral tax policy that benefits Georgia families and businesses.
With a projected $262 million in savings over the course of the next three years, we anticipate this will greatly benefit taxpayers and businesses throughout the state. However, we recognize that this is only the beginning of future progress in Georgia. In the future, we plan to reach our end-goal of becoming the most competitive pro-business state in the nation.
As a global leader in international business and commerce, Georgia has taken vital steps to increase our economic competitiveness on the global stage by modernizing our tax policy, especially as it relates to manufacturing. Since 2001, Georgia has lost approximately 200,000 manufacturing jobs to nearby states and international competitors. By removing the tax in this industry, we will join 36 other states with similar policies and provide another large incentive for companies to do business in Georgia. This exemption is estimated to save manufacturers $150 million per year.
In the past several weeks, Georgia has become the home of several major international firms: Caterpillar, CHEP USA, and Dinex Group. These key exemptions will continue to attract major corporations to the state and will help Georgia remain at the forefront of the global marketplace.
State lawmakers created this legislation while keeping the best interests of Georgia families in mind. For this reason, we have reduced the marriage penalty on couples filing their income taxes. Under current tax policy, married couples pay higher income taxes, especially when filing jointly. The personal exemption for married couples will increase from $5,400 to $7,400. We are confident this will be a welcome tax break to families currently bearing the burden of difficult economic times.
The information revolution of the past few decades has revolutionized many aspects of society, including our business practices. To ensure that our state's tax policy is as up-to-date as possible, we have introduced the E-Fairness policy in Georgia's tax reform plan. Currently, online-only businesses are exempt from sales tax and have an unfair advantage over Georgia's small businesses. Out-of-state and online-only businesses are held to the same standards as other Georgian businesses. Further, this is expected to bring an additional $18 million to Georgia each year.
For many Georgians, birthdays are not simply a reminder of one's age but also signify the yearly deadline to pay for their vehicle's ad valorem tax. According to this bill, the ad valorem taxes will be replaced with a one-time title rate of 6.5 to 7 percent after March 1, 2013, for new vehicle purchases. Sales taxes on new and used vehicles will be completely eliminated.
Georgia municipalities will be protected from losing revenue during the first four years of these tax code implementations. Local governments will receive a combination of property tax from vehicles that have not yet been phased out of the property tax system and title fee revenue.
Other reform measures within the bill include:
• Revising sales tax exemptions on agriculture to ensure fairness and consistency;
• Curtailing abuse in Georgia's income tax credit program for donation of conservation easements while maintaining this credit program;
• Capping retirement income exclusion for seniors at the current level of $65,000 or $130,000 per couple;
• Eliminating sales tax exemption for film productions in Georgia;
• Allowing certain regionally significant projects to be exempt from sales tax on construction materials;
• Renewing a sales tax holiday for school supplies and energy and water efficient products through 2013;
• Creating a 1 percent sales tax exemption on commercial aviation fuel to make our fuel rates more competitive.
Comprehensive tax reform not only benefits our state's current families and businesses but sends a strong pro-business message to prospective businesses who are considering investing in Georgia. As a legislature, we will continue to work toward reforming Georgia's tax code to better serve our families while increasing the international reputation of our state's business climate.
Butch Miller represents District 49 in the Georgia Senate. Contact him at 2420 Browns Bridge Road, Gainesville, GA 30504, 678-989-5301; 109 State Capitol, Atlanta, GA 30334, 404-651-7738; email@example.com.