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Georgia Needs a Permanent Process for Reviewing Tax Incentive Programs

Burt Jones

 

In 2022, the Georgia General Assembly prioritized and began a historic process by cutting the state income tax and providing a path for its gradual reduction over the rest of this decade. In December, we were pleased to join Governor Kemp to announce that we will accelerate the income tax reduction to 5.39 percent for Tax Year 2024. We fully support this initiative and the approximately $1.1 billion in savings for Georgia taxpayers that will result.

We shouldn’t be content to stop there. Georgia is in a position to cut its income tax because of a growing economy and wise fiscal stewardship, but more can be done to ensure that state tax programs are creating the right incentives. We believe the best way to make way for further cuts to the income tax  and grow our state economy is to closely review existing tax programs and end or reform those that do not provide a positive return to the state.

Throughout 2023, the General Assembly’s tax writing committees reviewed a number of Georgia’s current tax incentive programs. We have each been part of this effort, and we believe it is a process that should continue, as it only scratched the surface in evaluating how the state incentivizes job creation and economic development through tax policy. That’s why we support legislation to create a permanent process to regularly review state tax incentives.

The legislation, Senate Bill 366, will create a joint House and Senate Committee comprised of key committee chairpersons and other members selected by the Lt. Governor and the Speaker of the House. The legislation will expand the General Assembly’s ability to conduct audits and economic analyses of tax incentive programs while considering proposals for reform. The process will also draw on the expertise of our state’s top economists, the business and economic development community, and other stakeholders. Most importantly, the review committee will meet every other year during the months the General Assembly is not in session. From this year’s review process, it is evident that legislators need the time to hear all sides of these complicated issues, consider the fiscal and economic impact of specific parts of our state’s tax structure, and propose changes outside the crunch of the annual 40-day legislative session. Senate Bill 366 passed the Senate with bi-partisan and unanimous support on January 30, 2024.

Our proposal is an important way to keep Georgia competitive and to build on the successes of recent years. Georgia is consistently the top state in America for business, and we want it to ensure we remain number one. We have to ensure that Georgia’s tax structure is advancing that goal by making fiscally sound investments in long-term growth and job creation. Other states are putting regular review processes in place to make sure their tax strategies maximize their own competitive advantages. We should do the same.

Our plan is also the best way to make additional cuts to our state income tax over the next few years. Regular review can identify tax incentives that are wasteful, ineffective, or that have outlived their usefulness. Reforming or ending these wasteful programs makes it easier to cut the state’s income tax rate. We each share that goal, and we want to accomplish it in a way that does not jeopardize the state’s economy or fiscal health.

Transparency also breeds accountability, and we welcome it. The legislation will require that a summary of the estimated amount of tax revenue lost to specific incentives be included in the annual budget document provided to each of the legislators every session. Including this information in the budget will make our state’s tax policy more accessible for lawmakers and the public. Simply put, Georgia families and business owners deserve to see how their tax dollars are spent and what industries benefit from tax incentives. The people of Georgia have placed their trust in us, and we owe it to them to be wise stewards of their hard earned money.

Lt. Governor Jones is the President of the Georgia Senate. Senator Chuck Hufstetler serves as Chairman of the Senate Finance Committee. Senator Blake Tillery serves as Chairman of the Senate Appropriations Committee. 

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