Progressive Legislators Oppose Sales Tax on Groceries Reinstatement (UPDATE 2)


(APN) ATLANTA — Five progressive state legislators–State Sens. Vincent Fort, Donzella James, and Curt Thompson, and State Reps. Stephanie Benfield and Tyrone Brooks–are opposing some of the major recommendations of the 2010 Special Council on Tax Reform and Fairness for Georgians, which released its recommendations Friday, January 07, 2011.

Last year, the Republican-led legislature passed legislation creating the Commission and requiring it to release recommendations in January 2011.

Two of its most important and controversial proposals are to begin charging sales tax on groceries again–after Democrats under former Gov. Zell Miller eliminated the tax in the 1990’s–and to lower the income tax and corporate taxes.

“I am opposed to raising the sales tax on groceries,” State Rep. Tyrone Brooks told Atlanta Progressive News.  “I was one of those in the 1980s introducing legislation to [exempt] sales tax on food and prescription drugs.”

“I carried the legislation for the Georgia Citizens Coalition on Hunger for many years.  When Zell Miller became Governor, his Administration introduced the bill.  His bill passed,” Brooks recalled.

“I would be opposed to the Council recommendation to bring back the sales tax on groceries.  It’s a mistake.  Because it is a regressive tax.  It hurts the poor, those on fixed incomes, and the elderly more than anything else,” Brooks said.

“One of the things Republicans did last year at end of the Session, they repealed the tax credit we had passed, that [former legislator] Michael Thurmond had introduced – a low income tax credit,” Brooks said.

“Now they want to put the sales tax back on food, it’s a like a double-whammy,” Brooks said.

“Now people, who are doing well, making a lot of money, young people moving around, they don’t notice it.  If you’re not using food stamps [which are federally exempt from sales taxes], it is going ot be felt, it’s going to have an impact.  I think it’s a bad idea,” Brooks said.

“Those who have the means to buy more, those who are doing pretty well, what we call the wealthy segment of our population, they won’t notice it.  The fixed income, the poor- they will notice it,” Brooks said.

“I’m not surprised, the Republicans who control the body politic of this state, their whole philosophy is to help the rich get richer, at the expense of the poor and the working class,” Brooks said.

Brooks said the Democratic minority in the House would not be able to stop the legislation, without the help of some Republicans.

“First of all, in this economic downfall that we’ve had for a long time we know we have to do something to have a balanced budget and bring income into the State budget.  I don’t agree that putting tax back on food to be the answer,” State Sen. Donzella James said.

“It won’t even close the shortfall in my opinion.  With people suffering right now, they don’t need to pay more to have a meal,” James said.

“I oppose them putting taxes on food.  I know we have to find some way to deal with tax.  We need to do a lot more studying.  We don’t need to add tax to essential items,” James said.

“We should try to reverse tax exemptions on corporations and on those who should not have had the tax cuts in the first place,” James said.

State Sen. Thompson said he was opposed to increasing the sales tax on groceries, as well as to the package as a whole.

He said the package included some things that were good such as an increase in the cigarette tax.

However, he said removing the exemption for sales tax on groceries would “disproportionately impact low-income people.”

Thompson said the exemption for groceries had been one state budget policy intended to provide targeted relief to low-income people.  He said removing that relief, without making up for it in some other way, made illegitimate the whole discussion of removing the grocery exemption.

Thompson added that making the state’s revenue too dependent on sales taxes makes the state too vulnerable to economic downturns, where people reduce spending.

State Rep. Stephanie Benfield said “when unemployment is in the double digits, is not the right time to raise the sales tax on groceries,” adding it was particularly unfair to do that while at the same time heavily cutting the corporate tax.

State Sen. Vincent Fort said, “I think it’s a bad proposal, charging sales tax, it’s regressive to begin with
to put the burden on working families.”

Fort warned that the overall proposals are a step towards the so-called “Fair Tax,” which is a high sales tax with no income tax.  “It’s a back door to the Fair Tax.”

The main recommendations are as follows:

– Simplify the personal income tax and reduce the current six percent rate over time such that the rate does not exceed five percent after January 2012, 4.5 percent after January 2013, and four percent after 2014.

– Peg the corporate income tax rate to the personal income tax rate.

– Eliminate or sunset many sales tax exemptions, while keeping some for governments and business and agricultural inputs.  Eliminate the exemption for groceries.

Groceries are also taxed at some local levels, but currently not at the state level.  That is why in Fulton, one pays three cents per dollar in sales tax on groceries [three cents to Fulton; zero cents to the state].

The Commission noted that purchases made with Supplemental Nutrition Assistance Program (SNAP), or EBT benefits, will remain exempt from sales tax.

The Commission recommended imposing sales tax on the casual sales of cars, boats, and aircraft from person to person; and select personal and household services.

A new sales tax exemption would be created for energy used in manufacturing, mining, and agriculture.

– Increase the cigarette tax to 68 cents per pack, the average of the surrounding states.

– Set a 7 percent excise tax on communications services to replace the existing tax and fee structure.  The Commission also argued it was unfair that landline users were paying higher taxes than cell phone users.

– Change the motor fuel tax rate structure to cents per gallon rate and index to highway construction.

– Reduce insurance premium tax to around 1.75 percent.

The Commission was Chaired by AD Frazier of Affiance, LLC.

The Democratic House Caucus blasted the Commission for failing to include Democratic members, in a press release obtained by Atlanta Progressive News.

The Members included Bradford Dickson, Windham Brannon PC; Roy Fickling, Fickling & Company; Gerry Harkins, 2010 Georgia Chairperson of the National Federation of Independent Businesss; Dr. Jeffrey Humpreys, University of Georgia; Skeeter McCorkle, McCorkle Nurseries; Dr. Christine Rees, Georgia Institute of Technology; Suzanne Sitherwood, 2010 Chairperson of the Georgia Chamber of Commerce; Dr. David Sjoquist, Georgia State University; and Dr. Roger Tutterow, Mercer University.

“Our charge was to examine the tax code of Georgia, review it for fairness, and then recommend a new structure that would be as growth-friendly and as job-friendly as we could make it,” Chairman Frazier wrote in the report.

Eleven fact-finding sessions were held around in the state in the summer of 2010.  Frazier said he heard from and spoke to over 750 Georgia citizens, noting that the Georgia Farm Bureau “was the most prepared and vocal at each of our meetings.”

“Structural changes to the tax code are important, but imposing new taxes during a recession, in a time of stagnant wages and a depressed economy, is harmful to Georgia families and threatens the economic security of every Georgian,” State Rep. Stacey Abrams said in a press release from the House Democratic Caucus.

“The majority of businesses in this state are small businesses – LLCs and sole proprietorships.  These companies would not qualify for the corporate income tax cuts proposed,” State Rep. Brian Thomas said in a statement.

“The recommendations proposed by the council include taxes on Little League and high school football games (admission, concessions, tickets, etc.), a tax on food, and a new tax on prescriptions, such as insulin and blood press pressure medications,” the House Democratic Caucus stated.

“An increase of sales taxes forces Georgians to make difficult choices about whether to buy food or clothes for their families or whether to buy much-needed medicines.  There are so many new taxes, it’s like a new tax for every hour of the day,” Thomas said.

“In addition to raising taxes on Georgia families, the council proposes cutting corporate taxes by some 40 percent,” the Caucus stated.

“This corporate tax cut is a double hit to Georgia families.  Contrary to what many may think, corporate tax cuts do not create jobs – the saved revenues typically go first into the corporate coffers and are paid out to shareholders,” Abrams said. 

“Georgia families shouldn’t be treated identical to corporations.”

(END / 2011)

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