GREAT big sales tax, GREAT big power grab

Remember when Republicans were against big government? At least that’s what they said. Georgia GOP House Speaker Glenn Richardson is revising our tax system to centralize power into the hands of Big Government. This power grab will be funded by a high sales tax that will drive business out of Georgia, hike up the cost of living, and tax the daylights out of everything that breathes.

This week, I’ll explain how Richardson’s plan hurts taxpayers and local governments. Next week, we’ll look at the effect on Georgia businesses and unemployment.

Richardson calls it the GREAT Plan: Georgia’s Repeal of Every Ad valorem Tax. (The acronym should be GREAVT, but perhaps that sounded too much like grave or gravy.) He says he will make it illegal for counties to tax property, automobiles and boats. He says he will make up for lost county revenue with sales tax. Of course, that’s not mathematically possible without either raising the sales tax rate outright (which he claims he won’t do) or hiding additional sales taxes other places. By focusing on the repeal, Richardson hopes you won’t notice his funny math, and all the tax he’s adding elsewhere.

Richardson wants to expand the sales tax to cover anything that can be bought and sold, including services. Imagine paying sales tax for groceries, prescriptions, yard work, and even doctor visits.

But that’s still not enough revenue. In order to replace $9 billion in property taxes, Richardson must squeeze an extra $1,000 out of every man, woman and child in Georgia. At 4%, each Georgian would have to spend $25,000 in services per year. It just won’t work. Georgians only average $24,000 total spending per person. They can’t spend more on services alone than they spend altogether.

Rest assured, Richardson is not willing to give up one dollar of tax revenue. Georgia’s big government still has the same bills as before, and Richardson claims that local schools and municipalities will not be short-changed by the new system. All of the funds to operate Georgia will still come from taxes – that is, from us taxpayers.

Richardson has creative ways to extract these funds from you: multiple sales tax charges on every item. Currently the consumer pays sales tax just once, when an item is purchased at the store. Under the GREAT big tax, business-to-business transactions and raw materials will also be charged. Although he claims he will hold the line at 4%, the sales tax is much higher than that when you factor in the multiple instances of taxation before a product reaches the end user.

Imagine, for example, a loaf of bread. Under the GREAT big tax, bread and other groceries are no longer exempt from sales tax. Neither are raw materials or freight. The bakery will pay sales tax on the flour, the yeast, the packaging, and also the freight to get those goods to the bakery. Then the retail store will pay sales tax when purchasing the bread from the bakery. The same loaf of bread will get taxed at least three times. With most products, there are even more distribution and manufacturing layers.

All of this additional sales tax ends up tacked onto the final retail price – and taxed again at the checkout. Business-to-business taxes do not escalate in a straight line because of the tax on tax. When a product goes through several steps to reach the consumer (as nearly everything does), a so-called 4% sales tax may cost the consumer 20%.

Still other new taxes are concealed in the loaf of bread. What about the sales tax paid through the marketing firm who wrote the advertising campaign, and the sales tax paid through the newspaper who ran the ad? The store will also pay sales tax through the companies that clean its rugs and trim its lawn. All of these additional taxes end up in the price of a loaf of bread, where they are taxed yet again.

GOP House Speaker Glenn Richardson may not be trying to bankrupt consumers. His real goal is to take the reigns from local government. By eliminating property taxes, the Speaker can micro-manage every county.

Property taxes are paid to the county and used in the county. Property taxes support our local government and our county schools. Under the new plan, counties and municipalities lose the ability to set, collect, and disburse property tax monies. Instead, the lost revenue will be replaced with sales tax collected by the state. And guess who’s holding the purse strings? The Georgia House of Representatives, which Richardson rules with an iron fist.

In other words, Richardson wants to eliminate a tax which is locally controlled and replace it with a tax that he controls. The state gives up nothing, and gains control over everything. Counties, municipalities, and schools will have to go begging to the General Assembly for every dime. The goal of local elections will be finding Richardson cronies who can stay on the volatile Speaker’s sunny side.

The GREAT big sales tax does not eliminate programs like SPLOST which add local sales tax on top of state sales tax. In fact, Richardson wants to expand local option sales tax so that counties can use the money for maintenance and operation. Now, why would counties need operating funds if he were really going to make sure that local governments receive the same funds as before?

It is easy to see what will happen. As local governments and schools cower at Richardson’s feet begging for funds, they will be forced to cover shortfalls. Since property taxes will be illegal, local governments will demand even more local option sales tax on the top of the GREAT big sales tax. By this time consumers may not be able to afford a cup of coffee.

Understandably, local government officials all over Georgia oppose the plan. In fact, many of them dispute the figures. Tom Gehl, spokesman for the Georgia Municipal Association put it like this, “The speaker has a right to his own opinion, but he doesn’t have a right to his own math.”

Citizens should oppose the plan, too. We may not agree with every decision that our local officials make, but we elected them. They work right here in our county, where we can drop in to talk to them about problems, stand up to speak at a local public meeting, and tell our friends to help us boot them out if they do us wrong. That is more difficult to do with state officials who have a broad voter base, work in Atlanta and often operate beneath a veil of secrecy.

State Reps Ron Forster (Catoosa/Whitfield) and Martin Scott (Dade/Walker) seem to be caught in the Speaker’s spell. State Senator Jeff Mullis is more lucid, even citing the local control issue -- yet he also praises Richardson for introducing the proposal.

The GREAT big sales tax is a great big disaster looming in Georgia’s future. It will strip local sovereignty and put entirely too much political power in the hands on one man.

Stay tuned next week to learn how Richardson’s GREAT big tax will result in a mass exodus of Georgia jobs.

Jeannie Babb Taylor