A Georgia Sales Tax For the 21st Century

August 18th, 1998 by Leave a Comment

Roy Bahl & Richard Hawkins Fiscal Research Program School of Policy Studies, Georgia State University

Executive Summary

The sales tax has some significant advantages for Georgians, and voters seem to prefer new sales taxes to increases in income or property taxes. One advantage is the relatively small liability per transaction. Many Georgians have no idea how much sales tax they pay over the course of a year. Additional advantages include the fact that taxpayers understand the structure of the sales tax, the sales tax reaches virtually everyone and the state collects tax revenue from consumers who live in other states (e.g., tourists). With respect to its disadvantages, tax payments are not deductible from the federal income tax (while income and property tax payments are deductible), the sales tax yield can be surprisingly unstable over the business cycle and many Georgians believe the tax is regressive. Another important disadvantage of the Georgia sales tax is the collection of revenue from numerous firm-to-firm purchases. This revenue increases the cost of doing business in Georgia and masks the true burden of the sales tax to consumers. However, based on the recent actions of Georgia lawmakers and voters, the advantages appear to outweigh the disadvantages.

 

http://www.gppf.org/pub/Taxes/sales_tax.pdf

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