CONYERS - Rockdale County Tax Commissioner Dan Ray says he has several questions concerning the plan under consideration by the Georgia General Assembly to eliminate property taxes for school districts. And the overriding question he has is "Why?"
"There's always a gripe about paying taxes, but when you try to lower taxes by cutting services, folks will start yelling about having their services cut," said Ray, who spoke at a public hearing on the tax plan in Atlanta before the General Assembly session began Jan. 14. "I come away from wondering what the true objective is here. Are they wanting to limit or reduce taxes? If that's the case, then there's already a system in place at the local level. You can be a good steward of taxpayer money and manage it well, but I've found that the only way to reduce taxes is reduce services."
The tax plan proposed by House Speaker Glenn Richardson would be similar to a Homestead Option Sales Tax, which is used sparingly around the state. Only Rockdale and DeKalb counties utilize a HOST.
Under Richardson's plan, the portion of a person's property tax already credited by the state's homestead grant relief credit, or HGRC, would increase from $8,000 to $18,000 and would be applied toward school taxes.
The state would finance the increased credit with an increase and expansion of state sales taxes. Services not taxed now would be if the tax plan is approved. Some of those services would include barbers, plumbers, attorneys and auto mechanics.
However, Ray said the wording of the House bill suggests that an additional burden would be placed on counties and cities. The state's homestead tax credit now covers maintenance and operations portions of city and county taxes, but under this proposed plan, this credit would be applied only to local school taxes.
"If I'm interpreting this correctly, we would lose the HGRC, the tax credit for the county," Ray said. "If that's the case, then that is going to place an additional burden on the HOST."
Ray explained property taxes are calculated by taking the assessed value of the property subtracted by a basic $15,000 homestead exemption and the $8,000 HGRC from the state. In Rockdale County, the HOST is then applied to that amount leftover to get the county portion down to zero.
But take away the $8,000 HGRC, and the HOST will have to do more to cover those county costs, Ray said.
The tax plan also faces scrutiny by legislators in the General Assembly and will likely change before a final vote. If the measure passes the House and Senate, the tax plan will be placed on a referendum in the November general election for voters to decide.
Ray said if the plan passes, he also sees trouble ahead collecting taxes on services in those communities on state lines, like Columbus and Augusta. Ray said it's similar to problems of collecting taxes on automobiles purchased out of state.
The state now requires tax commissioners to collect sales taxes on out-of-state car purchases before issuing a license tag. In the past, however, people in the border communities would drive across the state line to purchase a new car specifically to avoid paying Georgia sales tax on the transaction. Car dealerships in other states now collect Georgia sales taxes but do so only after the state tightened the law.
Ray wondered how the state would control people from crossing state lines to get a haircut or a tune up on their cars to avoid paying the state sales taxes.
"Say you live in Columbus and you're looking for estate planning. Who would you go to?" he said. "The attorney who has to collect $200 before he does anything or take a drive to Phenix City (Ala.) and get the same job done while you save that $200?"
Jay Jones can be reached at firstname.lastname@example.org.