Weekly Update February 22, 2013

HB 164 proposes to eliminate the sunset, or expiration date, on the sales tax exemption for engines and parts used in the maintenance of aircraft not registered in Georgia. Created in 2007, the exemption allows companies that have airplanes serviced in Georgia to avoid paying sales taxes on the parts involved in that repair. Savannah-based Gulfstream and a few smaller aerospace companies would benefit if the bill passes. The Sales Tax Subcommittee held a first hearing on the bill this week.

HB 266, known as the Internal Revenue Code update, passed the full Ways and Means Committee this week. Each year the General Assembly must adapt Georgia’s tax code to relevant tax changes enacted on the federal level. Because state and federal tax laws are closely linked, many of these changes directly affect the liability of Georgia taxpayers. State lawmakers decide whether to adopt all of these federal changes or to “decouple” from them in certain cases. This year, the “fiscal cliff’ agreement created dozens of federal tax changes that affect Georgia’s code. If lawmakers chose to adopt all of them, Georgia would lose an estimated $259 million over five years. Instead, HB 266 makes modifications that limit the lost revenue to an estimated $79 million over five years, most of it coming in the 2014 budget year.

Legislation Progress Report from Previous Updates

HB 80 is a series of mostly technical changes to the new system of taxing cars created by last year’s omnibus tax bill, HB 386. It passed the House and is now in the Senate Finance Committee. The highest profile change is a reduction in tax liability for people who lease vehicles, but other tweaks in the bill should cancel out revenue loss. If the bill is approved, the new law would result in about $133 million in new revenue over five years.

HB 128, or the “Georgia Renaissance Act,” proposes the creation of $30 million worth of tax credits to help revitalize Georgia’s local downtowns, which would make it Georgia’s third-largest economic development tax credit. The bill had its first hearing before the Income Tax Subcommittee of Ways and Means last week. For additional information, download the HB 128 (LC 34 3600) Bill Analysis.

HB 140 proposes to significantly expand Georgia’s controversial tax credit scholarship for private school students by increasing its annual cap to $80 million from $50 million. Originally written to also create an equivalent tax credit for public schools, HB 140 was altered in the Income Tax Subcommittee of Ways and Means to only include the private school component. It had its first hearing before that subcommittee last week. For additional information, download the HB 140 Bill Analysis.

HB 193 would restore sales and use tax exemptions for qualified food banks and certain nonprofit health centers. Both were exempted from state sales and use taxes prior to 2011, when their specific exemptions were allowed to expire. The restored exemptions would run from 2013 to 2016 at an estimated cost of $1 million to $2 million per year. The bill had its first hearing before the Income Tax Subcommittee of Ways and Means this week.

HB 272 would extend Georgia’s Angel Investor Tax Credit, which allows businesses and individuals to reduce their tax liability in exchange for investing in Georgia-based startup companies. Currently scheduled to expire at the close of 2013, the new bill would extend the credit through 2015 while reducing its maximum annual cost to $5 million from $10 million. The bill had its first hearing before the Income Tax Subcommittee of Ways and Means this week.

HB 285 calls for the creation of a new program called “Invest Georgia,” designed to increase Georgia businesses’ access to venture capital. Funded through a combination of tax credits and OneGeorgia Authority funds, the program would cost an estimated $100 million over five years. The bill has been introduced to Ways and Means but has not yet received a subcommittee hearing.

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