Sat, March 02, 2024

New legislation to examine Georgia’s tax credit programs

The first step in adopting legislation to review Georgia’s catalog of tax credit incentive programs has passed the state senate.

Senate Bill 366 is the outgrowth of a series of public hearings held across the state to determine the efficacy of the tax breaks currently offered. Titled “Tax Expenditures Transparency Act of 2024,” the measure passed the Georgia Senate unanimously.

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In presenting the measure, Sen. Chuck Hufstetler (R-District 52), co-chairman of the Joint Tax Credit Review Panel, said it outlines a process to review the programs more regularly.

Among the items in the legislation is the creation of a Joint Committee on Taxation and Economic Development with the authority, “To investigate and review the fiscal and economic impact of the exemptions, exclusions, deductions, credits, deferrals, rebates, abatements, or preferential tax rates that have been the subject of an economic analysis requested pursuant to Code Section 28-5-41.1 in the prior calendar year and the year in which the joint committee meets.”

Speaking to the Columbia County Chamber of Commerce’s pre-legislative breakfast last November, Sen. Max Burns (R-District 23) who voted in favor of SB366, said he believes reviewing the tax credits being offered every few years is wise.

“Our objective is not to reduce or eliminate tax credits. Our objective is to understand the return on investment of those tax credits,” he explained. “We’re looking for a return on investment. At the end of the day, the objective is to attract jobs to employ people to enhance the tax base. And we would hope that the state would benefit from any credit that has been provided.”

Rep. Shaw Blackmon, co-chairman of the Joint Tax Credit Review Panel

According to the Georgia Department of Economic Development (GDEcD), “Our portfolio of incentives begins with a tax credit to spur job creation and includes an array of other credits for investing in R&D, shipping through ports, and making key expansion investments. Georgia tax exemptions are just as robust: they can save you lots of money in startup and operating costs.”

Among the best known is the Housing Tax Credit, which covers the range of housing projects in the state, rental or home ownership, new construction, or rehabilitation. One goal is to create or rehabilitate affordable rent housing to house Georgia’s growing population.

Another is the Georgia Entertainment Industry Investment Act (GEIIA). It offers tax incentives to companies to bring film and television productions to Georgia. Supporters of the program say it is responsible for the growth of the film industry in the Peach State. GDEcD said it grants an income tax credit of 20%, “to qualified productions which include feature films, television movies or series, documentaries, commercials, and music video projects.”

The Georgia Film Office, a division of GDEcD, celebrated its 50th anniversary in 2023 and hosted 390 productions, ranging from music videos to feature films between July 1, 2022, and June 30, 2023. Gov. Brian Kemp (R) said the industry spent $4.1 billion in Georgia during that fiscal year.

SB366 also allows for independent audits of tax breaks. The chairpersons of the Senate Finance Committee and the House Ways and Means Committee could request audits of six tax breaks each year. It calls for a preliminary analysis to be posted within six months.

The measure now goes before the House Ways and Means Committee. The chairman, Rep. Shaw Blackmon (R-District 146), was the co-chairman of the Joint Tax Credit Review Panel.

The full text of SB366 is at https://www.legis.ga.gov/legislation/66136.

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