State lawmakers failed to pass legislation to give most Georgians a tax cut, but they did approve breaks for select industries and areas of the state that will cost the state treasury about $483 million over the next five years, according to a new report.
The Georgia Budget & Policy Institute added up estimated price-tags of a dozen tax breaks state lawmakers approved, mostly on the final day of the 2017 session, which ended the morning of March 31.
But lawmakers did pass the usual assortment of tax breaks that run the gamut, from one promoting big-yacht repair to some supporting the music and video gaming businesses.
The tax breaks were contained in 10 bills now before Gov. Nathan Deal for his consideration. He has until next month to decide whether to sign them into law.
“Two of the weightier tax bills awaiting action by the governor are a reduction in car taxes for Georgians who lease vehicles and a questionable new business tax break aimed at rural economic development modeled on similar efforts that fared poorly in other states,” said Wesley Tharpe, research director for the left-leaning institute.
The reduction in taxes on car leases was an attempt to fix a law approved in 2012 that auto dealers said harmed the leasing business by making the taxes too costly. The change in House Bill 340 would cost the state, and save people who lease cars, $227 million over the next five years.
Senate Bill 133 offers tax credits for investing in rural Georgia businesses. Some lawmakers called it a “bad investment scheme” that will mean millions for a few national capital firms that lobbied for the bill. Supporters say it will provide the money needed to jump start growth in small towns. A similar proposal was vetoed by Deal in 2015.
Overall, Tharpe said, if Deal signs all the tax bills, the state estimates it will lose about $42 million in revenue in fiscal 2018, which begins July 1. That figure would rise to $129 million in fiscal 2021. The leasing tax cut, the tax credits for the gaming, film and music industries and the rural business tax credits would be responsible for most of that.
Lawmakers typically approve tax breaks every year. This year’s tab was higher than in most years, although in 2016 legislators backed tax breaks that are estimated to have a $471 million price tag over five years. The biggest was $180 million in tax credits for people who donate to struggling rural hospitals.