Before the forum, Lee told the Journal that if re-elected, he proposes offsetting property taxes for Cobb residents by raising the sales tax to 7 percent.
Lee said the idea came to him over the spring as he was going through the county’s budget.
“I asked staff to look at what alternatives exist, and they came back to me with a (Local Option Sales Tax) and a (Homestead Option Sales Tax),” Lee said. “I was trying to look for ways to offset that 60 to 65 percent of the revenue is generated by property tax, which is all over the place in terms of who pays what. Because of valuations and exemptions and foreclosures and short sales, you could have three houses right next to each other with different tax rates because they were sold under different circumstances. The fair tax or consumption tax basically gives everybody taxes that are paid based on what they purchase.”
Lee said he would bring his proposal to the Board of Commissioners for approval this fall if he is re-elected. It would then need approval from the General Assembly during the 2013 legislative session before going before Cobb voters.
Lee’s proposal was the first thing Savage brought up in his opening remarks during the two-hour forum hosted by the Cobb County Civic Coalition, which was moderated by Ron Sifen of Vinings.
Seated on the commission dais next to Lee, Bill Byrne and Mike Boyce, Savage peered out into the audience and said “9 percent sales tax.”
“I’ll say it again: 9 percent sales tax, here in conservative Cobb County,” Savage told the 50 to 60 people in the crowd. “Nine percent sales tax. How do we get there? We stay the course. We do what we’re doing. We follow the status quo.”
Georgia’s sales tax is 4 percent. In Cobb, another 1 percent goes to pay for the school system’s special purpose local option sales tax program, and another 1 percent goes to pay for a county government SPLOST, bringing the sales tax to 6 percent. Should the TSPLOST be approved on July 31, it would raise the sales tax to 7 percent.
“I am convinced if the TSPLOST passes, we will get hit with another point for MARTA to bring us to parity with the people in Fulton and DeKalb that have paid a penny for MARTA for 30 years, and then we have the new proposal that’s going to lower our property taxes in exchange for yet another point of sales tax. That brings us to 9 percent of sales tax if we stay the course,” Savage said.
Savage pointed out that during the last few SPLOST campaigns, advocates argued that 30 percent of the revenue comes from people who don’t live in the county.
Savage said he asked county officials where that assertion came from and was referred to a paper by Changhoon Jung, a visiting assistant professor in the Auburn University Department of Political Science. The paper included no such statement, but Savage said he did come across another one of the professor’s papers titled, “Does the Local-Option Sales Tax Provide Property Tax Relief? The Georgia Case.”
Savage read to the audience the paper’s conclusion, which states: “The findings show that counties collecting the LOST tend to have per capita property taxes that are $12 lower or property tax rates that are 1.8 mills lower than non-LOST counties. Although an extra dollar of LOST provides about 28 cents of per capita property tax relief, it increases total spending by about 48 cents per capita. Thus, the use of LOSTs has partially achieved the objectives of property tax relief, but, on balance, LOSTs are more of an augmentation of than an effective substitute for property taxes, leading to an increase in the size of local spending in Georgia counties. The findings imply that a fiscal illusion can occur when a local sales tax is used to reduce the property tax burden.”
Although Lee had multiple opportunities over the course of the two-hour forum to defend his tax proposal, he never did.
Boyce pointed out that this would be the fourth tax hike Lee has been involved with since being elected chairman in 2010, listing the 2011 SPLOST Lee asked voters to consider, his millage rate increase last year, his promotion of the TSPLOST and now this latest proposal.
“Four new taxes in 19 months,” Boyce said. “That’s not a Republican. That’s not a conservative.”