A penny here. A penny there. And pretty soon you’re talking about some real money.
The sales tax is one of the most tempting taxes a government can pass. It generates millions and millions of dollars. And with the exception of when someone makes a major purchase like a car, consumers really don’t realize how much they’re paying.
As this column is being written, the state legislature is in a tug of war over whether it should give voters an opportunity to pass a transportation funding bill with a one-cent sales tax. It is the third or fourth year in a row when there has been a concerted, and so far unsuccessful, effort get such a bill to pass.
The city of Atlanta has the highest sales tax in the state — currently at 8 cents. (Four counties in the Atlanta region only have a 6-cents sales tax: Cherokee, Cobb, Douglas and Gwinnett).
All of Georgia’s 159 counties have to pay a 4 cent state sales tax.
On top of that, the city of Atlanta , Fulton and DeKalb counties pay the MARTA penny sales tax, which will stay in place until 2047.
Fulton County also has a penny sales tax, of which the city of Atlanta currently receives 42 percent of the money raised.
And then there are two other special option sales tax that are set to expire in 2012.
There is the 1-cent Atlanta Public Schools tax that dedicated to construction and renovation of schools. It has been approved twice, and the next vote would be in 2012, if the school boards of Atlanta, Fulton and DeKalb decide it is still needed and voters agree.
And then the last penny tax on purchases in the city is the “Municipal Option Sales Tax” that has been approved twice to pay for the city’s water and sewer infrastructure. That tax also would come up for a vote in 2012, if the city decides it is needed to invest in its storm water system. That tax generates about $122 million a year.
So is the sales tax the way to go for investments in our community?
In addition to the transportation funding bill, there are other proposals for new sales taxes.
Earlier this year, the Atlanta City Council unanimously pass a resolution seeking permission from the state legislature to pass a penny sales tax for “Public Safety and Public Infrastructure Improvement Fund.”
Also, there’s a statewide bill currently in the legislature that would permit every county in the state to go to voters to pass up to a penny sales tax (for economic development and quality of life efforts. Arts and culture would a small portion of that tax, which also could go towards parks, green space and other initiatives that would improve quality of life.
The quality of life sales tax would give every county tremendous flexibility to decide what they would need to improve their communities. And for the first time in Georgia’s history, counties would be able to go for a fraction of a penny rather than a whole cent.
In a recent meeting of the Atlanta Committee for Progress, Atlanta Mayor Kasim Reed and some of the city’s top business leaders discussed the various sales tax proposals. One of the biggest concerns expressed was that city of Atlanta not increase its sales tax to the point where it is not competitive with other peer cities.
“We wanted to make sure we were thoughtful and that we discussed all of the proposals, “ Reed said. “We are watching our competing cities and doing a review of sales taxes. Charlotte’s sales tax is 8.25 percent, an overall tax burden that is higher than the city of Atlanta. We are moving very thoughtfully and cautiously.”
Reed said the first priority for the legislature to support a referendum for a regional sales tax for transportation.
“A regional T-SPLOST could be approved and Atlanta’s sales tax rate would still be competitive among our peer cities,” Reed said, especially if the education sales tax expires in 2012. “I certainly am not going to make any comments on where I stand on the sales tax until the legislature is done with this session. I’m very hopeful that we will get a transportation funding bill.”
In a comparison with other cities, Atlanta’s sales tax of 8 cents already is on the higher end.
Here is a sampling: Detroit: 6 cents; Boston: 6.25 cents; Indianapolis: 7 cents; Denver: 7.72 cents; Seattle: 9.5 cents; Virginia Beach: 5 cents; Columbus, Ohio: 6.75 cents; Portland, Oregon: 0 cents; Cleveland: 7.75 cents; Milwaukee: 5.6 cents; New Orleans: 9 cents; Kansas City: 7.725 cents; Cincinnati: 6.5 cents; Minneapolis: 7.775 cents; St. Louis: 9.241 cents; Sacramento: 8.75 cents; Pittsburgh: 7 cents; and Las Vegas: 8.1 cents.
Government revenues across the country are down. Sales taxes rise and fall with the economy. That means that the last 18 months have been especially hard on governments and entities that rely on sales taxes for a large portion of their funding, such as MARTA.
Yet governments have ever-increasing needs. For example, the city of Atlanta has a $750 million backlog of needed infrastructure improvements, such repairing bridges and sidewalks. And then the city estimates that it would cost another $60 million a year to maintain the city’s infrastructure.
So what is next? If the regional transportation sales tax fails during this session, Reed has his preference.
“I happen to favor and support a fractional tax of some kind for the arts,” Reed said, adding that it would give governments the ability to determine what they need. “It’s a good piece of legislation.”
In the next two years, we will have an opportunity to pass new sales taxes as the existing obligations for schools and sewers expire. But before we pass any new taxes, let’s make sure they are the right ones, because it will be years before we pass this way again.