Feburary 15, 2013
It is a pleasure to once again give you an update on the past week’s activities in the state legislature. The most significant legislation passed this week was HB 80. This bill corrected some problems with the "title tax on automobiles" portion of the tax reform bill passes last year.
I serve on the Ways & Means committee which writes the tax laws for the State of Georgia. Ways & Means handles more bills than any other committee and as you might imagine, consumes much of my time. We all see a lot of changes that we would like to make in Georgia's tax laws, but few can see the problems, or unintended consequences, that changes in tax law can potentially bring.
The tax reform package passed last year is a good example of the challenges we face. The tax reform was designed to be tax neutral by providing tax cuts in areas that would stimulate the Georgia economy and increasing taxes in some areas to bring some tax equity. The tax cuts we implemented included removing sales tax on energy used by manufactures, which would give our Georgia industry an equal footing with their competitors in neighboring states. The major tax increase was placing a sales tax on Internet sales by out of state vendors when selling to Georgia residents, thus making it a little more equitable for our local retailers when competing against Internet marketers.
Last year’s tax reform package also included changes in the taxation of automobiles. The ad valorem taxes on cars is eliminated for new purchases and the 7% sales tax on purchase of an automobile has been eliminated, and replaced with a 7% title fee - which on the surface is an even swap. However, that 7% title fee will apply to “casual sales,” which is the term used to describe sales other than from a dealer.