What Manufacturers Should Know about the Georgia Senate's Tax Exemption Study
A tax exemption study is being conducted by a special committee of the Georgia Senate to determine which exemptions in Georgia are working and which ones need help or should be eliminated. I recently spoke with Senator John Albers, chairperson of the Senate Special Tax Exemption Study Committee, to discuss the goals of his committee and the impact the study will have on Georgia manufacturers.
“Our committee is reviewing every tax exemption and credit offered in Georgia, including all the manufacturing sales tax exemptions,” explained Senator Albers. “I predict that most exemptions for manufacturers will have positive reviews. These exemptions have helped our state experience a great resurgence of both small and light to heavy duty manufacturing in Georgia. We want to grow that business. It’s an important part of our economy.”
Regarding the possibility of Georgia offering more research and development sales tax incentives for manufacturers, Senator Albers said, “I’m very familiar with the R&D tax credits offered. They have proven to be very beneficial. One could draw the conclusion on the surface that it looks pretty good.”
Senator Albers shared with me three specific actions that the committee wants to implement regarding Georgia’s tax incentives:
1) Extend the sunset period to five years
2) Create a sunrise process
3) Establish a layover policy for tax credits
Extend the sunset period
Currently, Georgia Senators evaluate the performance of a tax credit and exemption when the expiration or sunset period is coming up. This can happen on an annual basis, every three years or several years down the road. During the review period, they recommend if the credit or exemption should be continued, expanded or ended. The problem, as Senator Albers pointed out to me, is that not every tax credit or exemption is evaluated on a consistent basis and at times it takes four years for the Senate to receive the data to be able to do a thorough review. Consequently, the committee is recommending that the Georgia General Assembly enact legislation so that existing tax credits, exemptions and other tax expenditures are continually evaluated on an ongoing, rotating basis, so that each of the State’s tax expenditures are evaluated every five years.
Create a sunrise process
The committee wants to require that a comprehensive business plan accompany every new tax incentive bill introduced to the Senate. The plan would go through an approval process, including a review by the Fiscal Research Centers at Georgia State University. The review will validate that the incentive is set up to reach its goals and these goals benefit the community, not just one group or company.
Layover of tax exemption bills
To give the Senate more time to review a new tax exemption bill, the committee recommends a mandatory one-year layover of the bill.
“Our committee wants to create a better process for introducing, monitoring and improving the tax exemptions offered in Georgia,” explains Senator Albers. “We need to expand our tax incentive program. Why hold back?”
The committee will submit a report of their findings and recommendations by the beginning of January 2018. Senator Albers acknowledges that they will not review every tax exemption by December. The committee also will submit a schedule to move forward with the review.
The goal is to make sure every tax exemption and tax credit gets measured every five years, on a rotating basis, according to the Senator.
Public hearings were held throughout the state giving taxpayers the opportunity to share their opinions and ask questions about the tax exemption study.
Questions and information also can be submitted to the committee by contacting Senator Albers at email@example.com or 404-463-8055.
The purpose of this study is to provide exemptions that are the most beneficial to Georgia taxpayers. Georgia manufacturers can take advantage of many exemptions offered by the state, which in turn has a positive impact on Georgia’s economic growth.
I predict that Georgia will continue to be one of the leaders in sales and use tax exemptions for manufacturers. The fact that the Senate is conducting this tax exemption study proves the state’s commitment to support the growth of our manufacturing industry.
To learn more about sales and use tax exemptions for manufacturers, visit the Windward Tax website.