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Lawmakers to kick off car tax debate

ATLANTA - Property taxes are the least popular form of taxation, and the car tax is the most despised form of property tax.

That was the argument put forth by House Republican leaders last March when they vowed to make abolishing or at least reducing Georgia's car tax a top priority for next year's General Assembly session.

They'll start to make good on that promise on Monday when a study committee created to examine the issue holds its first meeting.

The panel will meet at 7 p.m. in Alpharetta, hometown of its chairman, House Speaker Pro Tempore Mark Burkhalter.

"Motorists shouldn't have to pay government to own a vehicle,'' he said in a statement. "We are going to explore whether the sentiment is there to eliminate this tax and whether the state can afford it now, over several years or sometime in the future.''

Property taxes on Georgia's 8 million motor vehicles are due annually on the birth date of the owner. The revenue goes to the counties where the tax is collected.

The tax brought in $627.3 million statewide in fiscal year 2004, according to a report published last month by Georgia State University's Andrew Young School of Policy Studies.

The report, compiled by the school's Fiscal Research Center, also found that counties' dependence on car taxes varies greatly.

Chattahoochee County gets nearly 24 percent of its property tax money from car taxes, the most of any county.

That's because much of the county's land is taken up by Fort Benning and, thus, is exempt from property taxes, said Clint Mueller, legislative director for the Association County Commissioners of Georgia.

At the same time, the county has a lot of cars because of the large number of soldiers who live there, Mueller said.

Burke County, on the other hand, barely gets 3 percent of its property tax revenue from the car tax, the report said.

Since the money goes to the counties, advocates for county governments and local school systems will be following the upcoming debate closely.

"It's really a significant amount of money,'' said Don Rooks, chief lobbyist for the Georgia School Boards Association. "Hopefully, if they go in this direction, they have a plan for replacing (the lost revenue).''

Georgia is among 26 states that impose a tax on motor vehicles. One state that doesn't is Virginia, the most recent to eliminate the car tax.

Virginia officials have been invited to Monday's meeting to talk about the state's experience with the issue.

The car tax became a hot campaign topic in Virginia in 1997 when Republican gubernatorial candidate Jim Gilmore made eliminating it the centerpiece of his platform and won largely on that pledge.

Since Virginia's car tax money also went to local governments, lawmakers either had to find a way for the state to pick up the cost of getting rid of the tax or force local schools and municipalities to cut services.

What Virginia ended up with was a law that phased in reductions in car taxes. To keep local governments from being affected, the state assumed the costs of the program.

Several years ago, the state's bean counters took a look at the program's escalating costs and estimated that by the time it was fully in place, the price tag would reach $1.5 billion a year.

By that point, the reduction had reached 70 percent, and that's where it stayed. In 2004, then-Gov. Mark Warner, a Democrat, worked with leaders of the Republican-controlled General Assembly to cap the state's annual share of the tax at $950 million.

Alan Essig, executive director of the Georgia Budget and Policy Institute, said Georgia policymakers are going to have to weigh similar concerns if the Legislature is to come up with a responsible approach.

"It's not even a policy question,'' said Essig, a former budget aide with the state. "You can make an argument either way over whether you should tax cars ... (But) unless you broaden the tax base, you have to raise the revenue somewhere else or decide what (spending) you're going to cut.''