At the halfway point in the 2011 session of the Georgia legislature, a measure has been introduced that would — for the first time ever – force Georgia citizens to pay sales taxes on certain professional services they receive. The proposal – HB 385 – also would greatly expand the number of personal services already taxed in the Peach State. If HB 385 — introduced last week by Republicans Mickey Channell of Greensboro and Larry O’Neal of Bonaire — becomes law, Georgia will join a total of only nine other states in taxing consumers for professional services they receive.
The genesis of this tax-raising measure lies in the recommendations issued in January by the “Special Council on Tax Reform and Fairness,” appointed last year by former Republican Gov. Sonny Perdue. According to an article last week reporting on the introduction of HB 385, the Council members recommended the personal services-tax measure, among others, because they believed the measures would “make the state more attractive to business.”
Setting aside the questionable logic of recommending new taxes as a way to lure business to a state or to encourage businesses to remain in the state, the new taxes most definitely will not be “more attractive” to consumers. It also is virtually certain that those businesses and individuals who would be required to collect, remit and report on the service taxes, would beg to differ with the manner in which the tax bill’s supporters characterize it.
The Tax Council included a laundry list of services from which it recommended sales taxes be collected (including laundry services); and the list – now incorporated into the pending legislation – includes far more than commercial services such as haircutting and styling. Most types of repair work, including that performed on shoes, clothing and jewelry, would be taxed. Every time you update your GPS device in your automobile, there would be a tax to be paid. Even the neighborhood lawn guy would tax you for cutting your lawn or trimming a hedge. Your local garbage service would become yet another tax collector; as would every person who cleans homes for a living.
The list goes on and on; the hits just keep on coming. (Even your dog or cat, if left with a pet-boarding service while you are out of town for a few days, will trigger the services tax.)
It remains unclear if the legislative version of the Tax Council’s recommendations will be voted on this legislative session, but Republican Channell, who chairs the Ways and Means Committee, has indicated this is his “goal.”
Americans for Tax Reform (ATR), the highly-regarded and non-partisan taxpayer watchdog group headquartered in Washington, DC, came out in opposition to the Council’s report when it was published last month. Looking at the 127-page piece of legislation — even considering it contains some long-overdue streamlining measures to the Peach State’s tax statutes – it is not difficult to understand why the Republican-backed proposal would run afoul of a fiscally conservative, taxpayer watchdog organization like ATR. Let’s hope it runs afoul of enough Georgia consumers and businesses to pressure the legislature into defeating it.
By Bob Barr — The BarrCode.