Despite efforts to trim down spending in the 2009 session, Georgia still faces a tremendous budget crisis stemming from the recession that has plagued the country.
The legislature is in the midst of a two week break to figure out how to manage the budget for the 2011 fiscal year, which begins in July. According to legislative leaders, everything is on the table, which includes tax hikes.
The three tax proposals receiving the most interest among Republicans are a 1.6 percent tax, conveniently called a “fee,” on hospital profits and insurances plans, a tax on hospital beds and a $1 per pack increase in taxes on tobacco products. Each of these proposals is poor public policy.
During a time when health insurance reform and the rising costs of health care, largely brought on by government regulation, are such a hot topic of debate, it shows poor judgment to propose a tax on insurance plans that will be passed off to consumers. A tax on hospital profits would hurt private medical facilities while propping up government-run hospitals. Both of these proposals are on the table to meet shortfalls in Medicaid funding, which cannot be cut due to an agreement by the state to maintain current funding levels when accepting stimulus money.
A tax on cigarettes would cause a dip in cigarette sales and not generate the tax revenue necessary to close the budget gap. Maryland and Florida passed similar tax increases in recent years, and both states saw a substantial and unforeseen drop in cigarette sales.
This tax plan also benefits surrounding states that would have a cigarette tax lower than Georgia's. Residents of the state living near the border could easily cross state lines and buy cigarettes, bringing them back to Georgia, while avoiding the state’s hefty "sin tax."
Democrat legislators have proposed an increase in the state’s income tax for individuals making more than $400,000 per year. This proposal would hurt small business owners and likely hinder job creation. Democrats are also pushing the $1 cigarette tax hike to balance the budget.
“Georgia’s budget problems are a crisis today due to the excesses of the past,” says Jason Pye, Legislative Director for the Libertarian Party of Georgia. “Our legislators have become addicted to spending, and when economic times get tough, it's necessary to quit that addiction cold turkey. It's obvious they can't.”
To solve the budget crisis, The Libertarian Party of Georgia advocates spending cuts, privatization of services and state parks, zero-based budgeting and a justification for all new spending programs.
The Libertarian Party is Georgia’s third largest political party and the only party in Georgia promoting fewer taxes, less government and personal liberty for all Georgians. To learn more, please visit www.LPGeorgia.com.