While the majority of Georgia property owners have been happy to hear about House Resolution 900, otherwise known as the GREAT plan (Georgia Repealing Every Ad Valorem Tax), government officials have not.
This past month, Pembroke Mayor Judy Cook and City Clerk Betty Hill attended one of seven regional Georgia Municipal Association meetings. The meetings were held to provide city officials with more information on what the plan was all about.
Jim Higdon, GMA executive director, said the GREAT plan is a direct attack on local control that will put the future of all Georgia cities, schools and counties at risk, according to an Aug. 21 urgent message sent to all mayors, council members, city managers and city clerks in the state. To a certain extent, Cook had to agree.
"I don’t think much of the GREAT plan. There are just too many unanswered questions, and I think it’d be a logistics nightmare," she said.
Richmond Hill Mayor Richard Davis was out of the office Tuesday and could not be reached, but he earlier compared the plan to communism.
Under the GREAT plan, every property tax in Georgia would be eliminated, and most sales tax exemptions would also become null and void. Since Speaker of the House Glenn Richardson first introduced the idea in last days of the 2007 session, Higdon said there have been several changes to the original plan. But there’s one common theme that hasn’t budged:
"Local decision making would be completely removed," Higdon’s urgent message said. "It poses one of the greatest threats ever to your city government."
The GMA said the plan, which they labeled ‘A Not-So GREAT Plan,’ would eliminate all state and local taxation, and replace them with a 5.75 percent flat income tax, and a 5.75 percent value added tax, or consumption tax, on goods and services.
The only exemptions to these taxes would be charitable contributions, mortgage interest, Social Security benefits, unemployment benefits, and rental payments with respect to primary shelter.
The proposal would also eliminate the county offices of tax commissioner, tax receiver and tax collector, effective Jan., 1 2009.
The GMA said there are definitely a number of questions for consideration that are currently unanswered in the proposal.
Questions include how the state would divvy up the revenue for local governments; whether the state would be in charge of deciding which services are most important for each community; what would happen in the case of an emergency need for revenue; and how the state would enforce those logistical issues Cook wondered about, such as compliance from service providers like beauticians, mechanics, lawyers, doctors, house cleaners, etc., who are currently unaccustomed to collecting and remitting sales taxes.
The GMA said the GREAT plan could also take power away from the people, with Higdon wondering how residents would be able to influence state legislature on local issues.
Higdon’s message said this change would result in a jump on federal taxes.
"Property owners can deduct property taxes from federal income tax returns, but will be unable to do so under this plan," he said.
Richardson’s GREAT plan also hasn’t produced any figures on how funds would be allocated for the needs of every school board, county and city.
"Will removing the exemptions and adding service taxes mean Georgians will be paying more in taxes throughout the year than they were in property taxes?" Higdon said.
Higdon said this proposal will also keep cities at static funding levels, meaning that even if the sales/service tax produces more revenue, cities will still get the same amount in SPLOST funds as they do now, with the state holding on to the difference.
Cook said she didn’t understand how the state would be able to create a budget for everyone, when they currently don’t have a real idea of what kind of revenue the tax change will create.
"How can you plan a budget when you don’t know what kind of revenue will be coming in? Where would you make it from? I believe in tax relief, I really do. But I’m realistic enough to know that you have to have a sustained source of revenue," she said. "I think we need to work on this from the income tax side, instead of the property tax – that’s just my personal opinion."
County Administrator Phil Jones could not be reached Tuesday afternoon for additional information or comments.
The GMA has been around since 1934, created to represent municipal governments throughout the state.
Currently, GMA’s membership totals over 500, or more than 99 percent, of the state’s municipal governments.
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