News and Insights

Georgia Tax Reform Study Commission Holds Inaugural Meeting

Tax Development Jun 16, 2006

The inaugural meeting of the Georgia Tax Reform Study Commission ("Commission") met on June 12, 2006 at the Capital Building in Atlanta, Georgia. The meeting was the first in a series that will be conducted by the Commission this summer and fall throughout the State of Georgia. The Commission was established by the Georgia House of Representatives during the last legislative session with goals to (1) review the current tax structure, (2) identify burdens for taxpayers, and (3) reduce compliance costs and expense. The Commission has been clear that they are not an incentives committee.

The seven-member committee is lead by Representative Larry O’Neil (Chairman of the House, Ways and Means Committee) and is comprised of State Representatives. Representative O’Neil specifically selected representatives based on their respected expertise and ability to contribute to the Commission’s goals. The members include state representatives David Knight, Chuck Martin, James Mills, Butch Parrish, Richard Royal, and Steve Tumlin. All seven members are considered co-chairs and will rotate chairs as Committee Chairman.

At the first meeting of the Commission, attendees heard presentations on Georgia’s tax structure from the Georgia School Board Association (GSBA), Georgia Municipal Association (GMA), the Association of County Commissioners of Georgia (ACCG), Governor’s Finance Office, and the Georgia Department of Revenue ("Department").

The GSBA reminded the Commission of their utter dependence on Georgia property taxes to fund public schools, while the GMA discussed ways of empowering local government and reducing property tax. They encouraged the Commission to revisit specific taxes, such as alcoholic beverages, that have not been reviewed in years.

The ACCG stressed the importance of revenue stream predictability. They encouraged the Commission to review taxpayer compliance costs and determine ways that tax simplification could have a direct impact on reducing these costs. They proposed cleaning up the tax code and challenged the Commission to determine the effectiveness and relevance of today’s code. The ACCG encouraged the Commission to evaluate the current tax code under the scrutiny of whether current law is accurately imposing a tax based upon the original legislative intent of the laws.

The Commission also expressed interest in investigating how other states are treating the topics of limited government, use of reserves and unappreciated assets, and consumption tax administration.

Commissioner Bart Graham presented on behalf of the Department, addressing the complexity of Georgia’s current tax code and the need for a revision of wording and format within the code. The Commissioner stressed the intent of the changes were not and would not alter the current intent of the tax laws. Commissioner Graham expounded on the unique relationship between audits and tax compliance. The Department attests that increasing compliance enforcement through hiring additional auditors will allow the state to audit more taxpayers, which will result in higher compliance and increased revenue for the state. Statistically, each new auditor the Department brings aboard results in about $4 million in increased state revenue. In 2005, Georgia conducted 26,000 audits (about 1% of Georgia taxpayers) compared to other states that audited 2.5 to 3.0% of taxpayers.

Representative Richard Royal will chair the second meeting of the Commission, which is scheduled to be held at the Joe B. Adams Conference Center in Camilla, Georgia on Thursday, July 13, 2006 at 1:30 P.M. The purpose of this meeting is to identify all sources of revenue from the local level through the state level, including fees and fines. Presentations will be made by the ACCG, GMA, the Department, GSBA, and the Carl Vinson Institute.

Future meeting topics include tax collectability, compliance, small business, and big business and balance.