Struggle over taxes yields more breaks, but not major review

ATLANTA (AP) — After days debating whether to dial back tax breaks, Georgia lawmakers agreed Wednesday to a bill that’s heavy on new or extended tax breaks but doesn’t contain a comprehensive review of the state’s tax structure that a key senator had sought.

The measure also omitted an effort to retaliate against Delta Air Lines after CEO Ed Bastian sharply criticized the restrictive voting bill that Gov. Brian Kemp signed into law last week. And it didn’t include a renewal of one particular tax break that a key senator has long derided as a “scam.”

Representatives and senators agreed to Senate Bill 6, which would create a new tax credit for medical equipment and pharmaceutical manufacturers that had been sought by Gov. Brian Kemp. It also creates a tax break designed to aid Lockheed Martin’s efforts to build new military aircraft in Cobb County, and extends existing tax breaks for railroads, fine arts performances and museums, repairing yachts and redeveloping historic buildings.

Senate Finance Committee Chairman Chuck Hufstetler, a Rome Republican, had wanted to use the bill as a vehicle to launch an overall review of Georgia’s tax structure, along the lines of a similar review held a decade ago.

“In Georgia we collect about $14 billion in income taxes a year, but we give out about $10 billion in sales tax exemptions and income tax credits,” Hufstetler wrote last month in the Rome News-Tribune. “Think about how low the income tax rate in Georgia could be if we phased out most of these credits.”

But the House resisted such a move, arguing in part that Hufstetler was trying to usurp the House’s constitutional role as the chamber in which taxing and spending legislation is supposed to originate. Instead, negotiators agreed only to a measure which lets the heads of the Senate Finance Committee and House Ways and Means Committee each request economic studies of up to five provisions of the state tax code each year. The studies are meant to evaluate the effectiveness of particular tax breaks.

The measure has some other notable omissions. One was a tax break for investment companies to invest in rural areas, fueled by money from insurers. Georgia had such a tax break, but it’s expiring and Hufstetler ardently opposed its renewal, saying it was a “scam” that gave all the benefits to the investors and little to the state.

Some Republicans angry at Delta’s criticism pushed an effort to eliminate an exemption of jet fuel from sales taxes beginning July 1, a move that could have cost the airline tens of millions of dollars.

House Speaker David Ralston made clear after lawmakers adjourned that he and others felt blindsided by the amped-up criticism after earlier, more muted statements.

“They like our public policy when we’re doing things that benefit them. And so, you know they reap the reward, that benefit, and then turn around and do this,” Ralston said early Thursday. “You don’t feed a dog that bites your hand.”

But it was hard to take the shot at Delta seriously, because House lawmakers included it with the rural investment tax break that senators were already resisting in House Bill 477. By the time House lawmakers voted, top senators had already told reporters that the Senate would not try to retaliate against Delta, making the vote more symbolic than anything. The measure was never called for a vote on the Senate floor, with senators adjourning.

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Follow Jeff Amy on Twitter at http://twitter.com/jeffamy.