Removing the sales tax exemption on "groceries," Part III. -- Advice to state from the Atlanta academic think tank study: Accountability.

Part I: A 10-9-04 post entitled: "The time is now; the need is acute; sponsors solicited and welcome -- In 2005 the Gen. Assembly needs to remove the sales tax exemption on groceries."

This post, along with the earlier posts linked therein, reviews the history of the sales tax and also the exemption on "food and beverages," how the exemption is not applicable to SPLOST, why "food and beverages" might not be what you think, and the the current state of the tax situation in Georgia.

Part II: A 11-28-04 post entitled "The Macon Telegraph: Tax breaks, including sales tax exemption for "groceries," costing state hundreds of millions in revenue. Programs to suffer."

This post reviews the same academic study reported in the ajc article highlighted below, and notes that the issue of tax reform and various exemptions is expected to be at center stage in the 2005 legislative session, when state government is expected to consider ever-deeper cuts in human services.

And the posts notes that if this doesn't happen, with the costs of education and health-care rising faster than spending cuts can keep up with them, Georgia may reach a state of "permanent fiscal crisis," according to Alan Essig, director of the nonpartisan Georgia Budget and Policy Institute, the academic study discussed below.
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The article in today's ajc is more concerned with accountability for tax breaks for industry recruitment, etc., actually, the lack thereof. But because of some of the quotes that are relevant to the topic of this series of posts, I have included it. The title of the article and some excerpts follow:

Tax breaks get no oversight
Report suggests state cheating itself

State government is losing about $2 billion a year from tax breaks, but lawmakers aren't keeping track of the long-term cost or whether the tax cuts are helping the economy, a new report says.

The report released Monday by the Georgia Budget and Policy Institute, an Atlanta think tank, said putting some kind of accountability into the mishmash system of tax breaks is particularly important now because the state could face another budget shortfall of $550 million to $700 million next year.

Senate President Pro Tempore Eric Johnson (R-Savannah) [says] that most of the $2 billion a year Essig points to comes from politically untouchable tax breaks often widely supported by the public, such as the state's decision in the late 1990s to remove the sales tax from groceries at the prodding of then-Gov. Zell Miller. Georgians save about $642 million a year by not having to pay a sales tax on groceries.

And tax breaks approved by Democratic-controlled Legislatures aren't likely to go away under the new Republican rule.

[Alan] Essig is a former Georgia State University fiscal researcher who started the nonpartisan institute a few months back to study state budget policy.

"Once you get a tax break, it's in forever," he noted. "If we're talking about dropping 45,000 children from public health care, we ought to look at some of these expenditures. Maybe there is a strong public policy argument, but we're cutting funding for children, for education." [By "these expenditures," Essig was talking about tax incentives or breaks to create jobs, etc.]

Even with rising tax collections, Essig said the state faces a huge shortfall next fiscal year just to pay for education, health care and prison programs. Because of growth in those areas, collections can't keep up. He said, for example, that while 20 percent more students attend college now than in 2001, there has been almost no increase in the number of college instructors.

Essig said such trends are likely to continue into the next budget year, when Gov. Sonny Perdue and legislators will have to come up with about $500 million just to fund rising health care costs