Though both the tax reform and immigration initiatives continue to change as the 2011 session enters its final week, a number of major features and the rationales behind them have remained in place throughout the legislative process, and will likely end up in the final bills as well.
The latest version of the bill aimed at combating illegal immigration, HB 87, has undergone a number of changes by committees in both the House and Senate. The focal point, however, remains a provision requiring contractors doing business with state or local governments to use the federal work authorization program, commonly referred to as E-Verify.
The main impetus for this came from public pressure following a few high-profile instances where illegal aliens were found to be working on public works projects. Additionally, the bill would eventually require private employers with five or more employees to use E-Verify for new hires, and would make intentional violation a misdemeanor.
One fairly consistent feature has been a provision that allows law enforcement to check immigration status if an officer has probable cause to believe that someone has committed a crime. The idea, of course, is that more active enforcement of immigration law by local authorities will help expedite the process of detaining and handing over suspects who may be in the U.S. illegally to federal authorities.
This was a feature loosely drawn from Arizona’s recently passed law, and has been a staple of most of the legislative proposals to this point.
HB 387, the tax reform proposal, continues to evolve even further as the joint committee works to produce a final bill before the legislature adjourns next week.
In a press conference, House Speaker David Ralston indicated that a final version agreed upon by the governor and legislative leaders will make its way through that committee on Monday and then to each chamber for a vote. Generally speaking, the proposal still seeks to broaden the sales and use tax base and reduce the income tax rate from the current 6 percent to just 4.6 percent in 2012. But instead of maintaining the revenue neutrality of the changes, the most recent plan offers a net tax cut of about $197 million over three years.
Eliminating the sales tax on energy used in manufacturing processes also remains a key feature, and most of the commonly used deductions, such as those for charitable giving and senior income, remain intact as well. Additionally, the current assortment of various taxes and fees on communications services will be replaced by a flat 7 percent sales tax.
Some of the goods and services that will not be taxed include groceries, veterinary care, Girl Scout Cookies and Boy Scout Popcorn, AAA and gym memberships, lawn care and haircuts.
All in all, the main goal of the changes remains the creation of a fairer and simpler tax environment that relies more heavily on taxing consumption. More details will likely emerge when the committee releases its final report on Monday.
March revenues hold up
State revenues grew at a 10.7 percent rate in March continuing a very encouraging trend. Total revenues for the month totaled $1.1 billion with an increase of $107 million.
Individual income tax collections grew by an impressive 12.5 percent or $43 million on collections of $388 million. Refunds of $499 million actually declined by $26 million from March of a year ago.
Sales tax collections for the state increased 16.4 percent or an increase of $58.3 million on sales tax collections of $413.1 million for March.
Motor fuel tax collections in total were up 6.5 percent or $4.5 million, but higher prices began to push down consumption as the excise tax, based on per gallon, fell 1.3 percent.
The third month of the quarter showed an increase in corporate income taxes of $43 million or 32.6 percent. Tobacco and alcohol taxes were both down for the month at –6.9 percent and –5 percent respectively.
Three quarters of the year in the books
Year to date, there are encouraging signs with total revenue up 9.4 percent or $959.9 million on total revenue of $11.2 billion after nine months of the fiscal year. Individual income taxes are up YTD 10.6 percent or $532.6 million. Sales taxes are up 7 percent or $246 million and motor fuel taxes are up 14.2 percent or $85.5 million. Corporate taxes are up 12.3 percent or $53.1 million, hopefully an indication of businesses’ profitability recovering.
If you would like additional information regarding a specific piece of legislation, you may access the Georgia General Assembly Web site at www.legis.ga.gov.
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