A Double Standard for Sales Tax Breaks

Tax breaks should be decided on their merits, not based on the pull of powerful lobbyists.

Unfortunately, the governor seems to have taken the opposite course this month in his treatment of two sales tax exemptions.

While he vetoed renewal of a sales tax exemption for food donated to food banks, items purchased by volunteer health clinics and Goodwill Industries’ job training service – all nonprofit efforts —  he signed off on renewal of a sales tax exemption for aircraft repair that basically benefits one profitable company, Gulfstream.  In his veto message the governor said the sales tax exemption for the nonprofits should be reviewed by the Governor’s Competitiveness Initiative Task Force to determine “whether economic or noneconomic justifications exist for the exemptions to be renewed.…”

While it is always wise to determine whether tax breaks are justified and doing what they’re supposed to do, the principle shouldn’t be selectively applied. The aircraft repair tax break will cost the state more than $5 million during the budget year that begins July 1, to largely boost the bottom line of a single company, and was renewed without any independent analysis of its economic benefits. 

Meanwhile, the tax break for the nonprofits would have cost the state less than half as much — $2.2 million next budget year  — and benefits numerous nonprofit organizations across the state.  The sales tax exemption for food banks alone would have resulted in more than 800,000 additional meals for Georgia families.

With the obvious public benefits gained by food banks serving more meals, health clinics treating  more patients, and Goodwill providing job training to the unemployed, the governor should have set a higher bar for the uncertain benefits of the tax break for Gulfstream.

If nonprofit organizations are required to prove the public benefits of their tax breaks, corporate tax breaks should be held to the same standard.