District 17 State Rep. Howard Maxwell, R-Dallas, said the legislation, House Bill 386, replaced the ad valorem tax on vehicles owners pay annually on their birthdays with a fee on title transfers.
“Some like it, some don’t. I think it’s a pretty good idea,” Maxwell said.
The phased-in, 7 percent title fee will be charged whenever a car changes ownership, he said.
“It’s a fee. It’s not a tax,” he said, to laughter from the crowd.
Title transfer fees will allow the state to gain revenue from “casual sales” of vehicles between individuals, though transactions between immediate family members will be excluded, he said.
“We’re the only state in the country, pretty much, that has no tax on casual sales,” Maxwell said.
The legislation also mandated that major Internet retailers collect state sales tax from Georgia residents.
Maxwell said lawmakers determined it was not fair to require Georgia’s “brick and mortar” businesses to pay state sales taxes it collected from consumers but not Internet sales companies. Consumers were required to pay sales taxes directly to the state on online purchases but almost no Georgian typically did so, he noted.
“We’re trying to fix that,” Maxwell said. “We’re trying to get that Internet money coming back in.”
The measure also includes a number of other changes, including a state income tax cut for married couples and elimination of sales tax on energy used in manufacturing.
It also returned an annual tradition, the state sales tax holiday, which legislators halted in 2010 in the wake of massive budget deficits.
The Georgia Budget and Policy Institute has estimated House Bill 386 will decrease state revenues by $86 million in the first two years — an amount the Institute predicted will have to be offset with cuts to the state budget.
Lawmakers this year passed a 2012-2013 budget of $19.2 billion amid Georgia’s “slow economic recovery,” Maxwell noted. The General Assembly was able to increase the state’s reserve fund to $328 million after it dwindled to almost nothing in the middle of the last decade, he said.
Maxwell also said this year’s budget also operates on 20 percent less per capita spending than in 2002 despite Georgia’s population growing by 10 million in that time span, he said.
He noted the state budget was around $21.2 billion prior to the recession that began in 2008. By 2010-2011, the budget dropped to $17 billion.