Moderated by Rick Badie
Georgia House Bill 399 would keep Clayton County from collecting taxes from vendors at Hartsfield-Jackson International Airport. State Rep. David Knight, the bill’s sponsor, says Georgia law doesn’t allow such a thing. Meanwhile, State Rep. Michael Glanton says Clayton could lose millions in revenue if the bill becomes law.
House bill protects integrity of tax
By David Knight
Georgians should be confident that their taxes are being assessed equally, uniformly and with clarity. House Bill 399 seeks to give Georgians that confidence.
Some local governments have started issuing a “possessory interest tax.” These local governments have used this undefined tax as a way to levy taxes on entities for property they do not own, cannot transfer, and use at the will of another. In other words, they have invented a tax to tax things that state law does not allow them to tax.
Clayton County and the city of College Park have begun using this possessory interest tax. They are inappropriately taxing airport concessionaires that operate as usufructs. A usufruct gives an entity, like a concessionaire, a license to use real property. It is more limited than a lease. Examples of usufructs include stores in the mall and restaurant chains located on places like college campuses.
According to Georgia law, usufructs are not taxable. That means local governments cannot send a bill for property taxes to these entities because they do not own an interest in the property. Remember, they merely have a license to use the property. Rather than taxing the store or restaurant using the space directly, state law requires local governments to tax the property owners who allow stores and restaurants to use the space.
Those seeking to continue using this possessory interest tax point to wording in the aviation code to justify this tax. But that law was intended to clarify that taxable property, such as leases, could not hide from taxation at an airport. Leases differ from usufructs because leases give the leasee a controlling interest in the property. This law was never intended to give local governments the ability to tax usufructs.
When the Ways and Means Committee in the House heard testimony from Clayton County tax officials this session, several things struck me. First, why did they only assess taxes against 30 percent of the concessionaires and not all of them? This question raises concerns about the uniformity clause and equal protection clause under the Georgia Constitution. Next, if Clayton County truly wanted the courts to decide this issue, as it has claimed, why did it fail to take steps to certify three years of tax appeals to the superior court that the concessionaires had previously filed?
Recent financial struggles do not give local governments the right to create a tax that is not authorized under Georgia law. As policy makers, we seek to right the wrong and protect the integrity of our tax code, and that is what HB 399 does.
State Rep. David Knight, R-Griffin, represents District 130.
Clayton authorized to collect this tax
By Mike Glanton
What impact would House Bill 399 have on Clayton County?
I do not know what the overall financial impact would be. I have received reports with variations on impact to budgets of the county, school system and College Park. It is not unusual to get differing opinions and reports.
What I do know is Clayton cannot take another hit to its revenue sources. Since 2009, we have had to endure extension of tax exemptions granted to Delta Airlines by the General Assembly, loss of the consolidated car rental facility and financial fallout from the loss of public school accreditation.
With HB 399, Clayton schools would lose $8.8 million, the annual salaries of 130 teachers. Further erosion of the county tax digest would negatively affect our ability to provide services. The county will still have to provide law enforcement and judicial services to the airport as well as its residents.
Additionally, if Clayton County is prohibited from collecting the tax, even though about 80 percent of the airport lies within the county, a government entity cannot tax another government agency. So Clayton cannot pass this tax on to Atlanta.
If the reason for this legislation is to correct a process operating under the wrong code, why wouldn’t we just move the ability for Clayton to levy the tax from the Aviation Code to the Code section related to taxation? It is obvious the House, Senate and governor‘s intentions, and the spirit of the law, were to allow Clayton to collect airport taxes.
If the argument is that airport vendors should not be paying taxes on real property to which they do not have exclusive rights, why does the revised contract between Atlanta and the vendors stipulate that: “Notwithstanding the foregoing, the aviation manager may authorize concessionaire to pass through to the customer certain possessory interest taxes payable by concessionaire directly to various taxing authorities, provided that such pass-through is reflected as a separate line itemization on each invoice or receipt issued to the customer”?
The only taxing authorities authorized to collect the “possessory interest tax” are College Park and Clayton County. This reference does not apply to any other airport or county in the state. In other words, the vendors, by contract, have the ability to pass the tax on to airport customers. This method of passing on tax requirements to customers is acceptable in the state in the form of hotel-motel taxes in many of our cities and counties. I submit that a high percentage of airport concessionaires/customers are not Georgia residents. Clayton could have handled the vendors’ appeals in a timelier manner, but we must allow the civil process to work.
To allow Clayton to continue to levy the tax and the vendors to pass on the cost to its “out of town” customers and international visitors is consistent with the hotel-motel tax. We will continue to fight this motion through the Senate, the governor’s office and beyond.
State Rep. Mike Glanton, D-Jonesboro, represents District 75.