Legislators open to Lee’s tax plan
by Jon Gillooly
December 02, 2012 12:57 AM | 2790 views | 8 8 comments | 10 10 recommendations | email to a friend | print
MARIETTA — County Chairman Tim Lee advocated his proposal to substitute a portion of property-tax revenues with a new sales tax during a breakfast meeting between commissioners and the Cobb legislative delegation at the Safety Village on Friday. His idea got a warm reception from some legislators.

“We need to look at new ways of, not necessarily generating more revenue, but different ways of obtaining revenue, and a HOST (Homestead Option Sales Tax) would help us do that,” Lee said.

Roger Tutterow, a Mercer University economics professor, said surveys indicate that property taxes are among the least popular taxes among the public.

“There’s probably some popular support for substituting sales tax for property tax,” Tutterow said. “I think you have to be careful in the sense that sales tax does vary with the level of economic activity, and so when you go through slow periods the HOST tax could drop off. The county does run that risk.”

J.D. Van Brink, chairman of the Marietta-based Georgia Tea Party, is a good example of someone who hates property taxes.

“Philosophically, the property tax is terrible,” Van Brink said. “It’s the first plank of ‘The Communist Manifesto.’ I am just philosophically opposed to a property tax, period. The HOST is moving in the right direction. I personally would support it.”

The HOST proposal was a campaign pledge Lee made in his re-election bid last summer.

The sales tax in Cobb is 6 percent. Four percent goes to the state, 1 percent goes to the county’s special purpose local option sales tax projects, and 1 percent is another SPLOST for schools.

The HOST tax would equal 1 percent, raising the sales tax to seven percent. A voter-approved HOST would be collected indefinitely, unless the referendum included a sunset date, or until a separate referendum is approved to end it.

Lee’s plan is to spend the coming year speaking about the idea with the community and legislators. He plans to begin holding town-hall meetings on the subject after the March referendum on renewing the school SPLOST.

He hopes the county commission will then request that the Cobb legislative delegation pass legislation during the 2014 General Assembly calling for a November 2014 referendum.

“It’s a little bit of time, but I think it’s worth looking at as an alternative to how we … raise revenue through property taxes, which is all over the board,” Lee said. “You could have three houses made by the same builder, the same year, the same features, right next to each other. One went through the banks, one went through foreclosure, all have different values, have different tax rates associated with them.

“There’s a way we think is better to deal with it and we’d like to have that discussion,” he said.

Lee acknowledged that Cherokee County voters rejected a HOST referendum in November, which he blamed at least in part on confusing ballot language.

Clint Mueller, legislative director for the Association of County Commissioners of Georgia, said a HOST creates zero new revenue for the county, though counties can choose to use up to 20 percent of the HOST revenue for capital expenses.

Lee said he would like to use 10 percent of the HOST to pay for capital maintenance costs, such as upgrading computers. Those expenses have been funded by surpluses in the past and “you can’t depend on a surplus,” he said.

Mueller, who lives in Woodstock and voted in favor of the HOST in the Cherokee referendum, believes people who own homes valued at $100,000 or more would likely benefit from a HOST.

The issue for homeowners is how much they spend each year buying sales-taxable items in their county, Mueller said.

“That’s the analysis each individual has to go through, to whether they are financially better off or worse off under a HOST, is how much do I spend a year in sales-taxable items, versus how much county property taxes do I currently pay a year,” he said.

In Cherokee County, officials had estimated the HOST would generate about $18 million a year. The county needed about $11 million to completely wipe out county property taxes on homesteaded property, he said.

Lee said Cobb County generates between $110 million and $120 million a year through its 1 percent sales tax, and collects about $80 million a year in homesteaded property tax.

A HOST “takes the general-fund portion, rolls it back, which is about $90, $95 million, sets aside about 10 percent for capital improvement, and then what’s left gets applied to business taxes across the board,” Lee said.

“Folks have to understand: It’s the general-fund budget (portion) that it sets aside. It doesn’t set aside the fire and it doesn’t set aside the debt-service.”

State Rep. Ed Setzler (R-Acworth), chairman of the legislative delegation, suggested modifying Lee’s plan.

“Perhaps literally all county taxes would be funded through a HOST, so that those who are seniors who are not paying school taxes might literally have no ad valorem tax on their homestead property,” Setzler said. “That might be a counter proposal or something in between.”

State Rep. Alisha Thomas Morgan (D-Austell) said she was concerned about the impact raising the sales tax may have on the poor.

“My first concern is how it impacts low-income folks,” Morgan said. “I’m willing to look at it, though. If it’s about lowering property taxes, it’s worth considering.”

State Rep. Earl Ehrhart (R-Powder Springs) said he liked the idea, but that the HOST law needs a few changes before he would support bringing a HOST to Cobb.

“I agree with the philosophy behind HOST because it changes the tax burden from the property tax to the consumption tax. I’ve always been for that,” Ehrhart said.

But the capital projects to be funded via the HOST revenue, he said, don’t have to be approved by voters.

“You don’t have to be transparent with the public about it,” Ehrhart said. “We’ve got to get that out of there.”

Ehrhart, though, applauded the way Lee is slowly rolling out the plan.

“This is the way to do public policy. You bring in all stakeholders,” Ehrhart said. “The other thing he said, I’m thrilled to hear the chairman say this, is the idea that we’ve got to make sure that you can’t backdoor this with a millage increase. There’s a mechanism in place and other statutory construction that will allow you to do that. And at that point, I am a supporter of moving the tax burden from the property-tax payer to the consumption-tax payer.”

Mueller, of ACCG, believes the HOST was defeated in Cherokee in part due to confusing ballot language. Another big factor was opposition from the local tea party, he said.

“The tea party was pretty much against it, and the reason they were against is first of all they didn’t trust the commission up there to do what they said they were going to do,” Mueller said. “They didn’t trust the county not to raise the millage rate in the future.”
Comments
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COBB CSI
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December 04, 2012
Yes go ahead than big ticket items other than cars can be sold in other counties Lee Bob sounds like a Democrat to me. Tax and spend every time you turn around its more taxes Lee Bob’s special interest groups are expensive to maintain here in Cobb. Maybe Lee Bob can even give you costly unprofitable Light Rail for Christmas. Even if the host tax is in place what happens when the government gets addicted to the new drug host tax, is the law tied to the millage rate better look past the driveway fools!! Sounds like a plan that Sam Olens is behind you know he still runs the county.
Makes Sense
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December 03, 2012
The best thing about this tax (WOW...I can't believe I just wrote that!) is that it would greatly diversify the county revenue stream. Cobb wouldn't be so dependent on property tax which has decreased exponentially with declining property values.
Larry Savage
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December 04, 2012
The county was hurt by declining assessed values, but not as much as you might think. Cobb taxpayers get a break on General Fund taxes (the largest piece) with the variable Homestead Exemption. When assessed value INCREASED, your Homestead Exemption increased the same amount, so your tax bill DID NOT GO UP. Conversely, when assessed value DECREASED, your GF taxes DID NOT GO DOWN, and county revenue for the GF did not fall. Revenue declined only on property that re-assessed at values below original value or with new owners.
SG68
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December 02, 2012
A consumption tax is the way to go as long as you have the appropriate restrictions in place regarding the escalation of property taxes.

One without the other would be a disaster.

Also there should be some recognition of a sales tax exemption on "necessity" items i.e. food, drugs, etc.

Maybe the 'fair tax" template might be a good starting place for something like this.
Larry Savage
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December 04, 2012
DeKalb County (for one) did this years ago. Then, over time, they re-instituted the property tax while keeping the extra sales tax.
JR in Mableton
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December 02, 2012
Sales tax is the fairest form of taxation. I support the HOST as well as the fractional penny.
Larry Savage
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December 04, 2012
Don't count on it. Higher sales taxes favor those with higher incomes who don't spend every penny they make. The tax burden falls most heavily on those who are at the bottom of the economic ladder and must spend every penny. High sales taxes also promote an "underground economy", where people barter and trade off the books to avoid taxation. That shifts the tax burden to those who work for wages and can't take advantage of barter and "underground" trade. Cash is king.
vat tax
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December 02, 2012
I am for the Lee Tax. This just make sense. I believe we should pay as we go which brings the issue of Obama care. We should have a VAT sales tax that everyone should pay. If we are going to have Obama care everyone should pay for it now not increase the national debt.
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