Less far-reaching than last year's recent tax reform plan, Georgia legislators this week unveiled a number of changes to their sales tax. There are some gimmicky ideas but many involve exempting business-to-business transactions, which is a move toward better tax policy. A properly structured sales tax should tax all goods and services once and only once, but many states tax business purchases. By doing so, tax is paid when the business buys raw materials and again when it is sold at retail: multiple taxes on taxes, or "pyramiding." This causes distortions and harms economic decision-making.
- Eliminate state sales tax on energy used in manufacturing
- Consolidates a patchwork of agricultural input exemptions into three general exemptions for energy, equipment, and other inputs (seeds, fertilizer, etc.)
- One percent tax exemption of commercial aviation fuel
- Eliminates annual property tax on cars, replacing it with a one-time title tax
- Reduces income tax for married couples by increasing their personal exemption from $5,400 to $7,400
- Reduces conservation easement tax credit
- Caps retirement income exclusion at $65,000 ($130,000 per couple)
- Eliminates sales tax exemption for film production (while keeping the state's popular but poor tax policy film tax credit)
- Two-year back-to-school sales tax holiday, a gimmick
- Orders out-of-state companies to collect online sales tax, which is unconstitutional
- Permits the state to waive sales tax on construction materials for select projects.
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