The House and Senate overwhelmingly passed tax reform legislation (HB 386) duirng the 2012 legislative session and Governor Nathan Deal signed it in to law on April 19, 2012.
Legislators working on this bill had several priorities, and ACCG worked closely with them to make the legislation at least revenue neutral for local governments collectively, considering statewide data for counties, cities and schools – not individual county data. ACCG also worked to include several critical last minute amendments.
Below ACCG has provided information to help explain the changes included within this legislation.
Vehicle Title Tax
ACCG has received many questions regarding the part of the legislation that replaces the annual ad valorem tax and the sales tax on automobiles with a one-time vehicle tax. Although the vehicle tax may be referred to as a “title fee” it is actually an ad valorem tax that is paid on the value of the vehicle when that vehicle is titled. Instead of paying ad valorem taxes annually on the vehicle, they are paid once, up front, when vehicles are titled. Additional information is available below:
Elimination of Sales Tax on the Energy Used in Manufacturing
Another component of the legislation removes the state and local sales tax on the energy used in manufacturing. This exemption is subject to a four year phase in of 25% per year until it reaches the full exemption in 2016. The legislation allows for counties to pass an ordinance to collect an excise tax on the energy used in manufacturing to make up for the sales tax revenues lost through the exemption established by the state. Additional information is available below:
Collection of State and Local Sales Tax on Internet Sales
The legislation also includes a provision to expand the number of out-of-state companies required to collect local and state sales tax on Internet transactions that have previously not had been taxed because the business did not have a physical presence in the state. This will have a positive impact on state and local sales tax.
Establishment of Conservation Easements
The legislation includes a comprehensive revision of the income tax credit for the qualified donation of conservation real property. It also prohibits counties, cities and consolidated governments from holding a conservation easement unless the encumbered property is located at least partly within the boundary of the local government.
Other Components
· Elimination of the sales and use tax exemption for film and equipment production. This will positively impact state and local sales tax. Other incentives for the film industry remain unchanged.
· Restoration of the sales tax holidays for school supplies and energy-efficient appliances. These holidays were eliminated several years ago as a result of the economic downturn. These holidays will impact state and local sales tax.
Additional Information
HB 386 (As Passed)
Tax Reform Legislation HB 386 Webinar
The General Assembly has passed major tax reform legislation (HB 386) and it awaits the Governor’s signature. ACCG Legislative Director Clint Mueller explains the legislative process that was used to move this bill so quickly and provides an explanation of the major tax reform initiatives included in it. 30 minute overview followed by time for Q&A.
