TSPLOST: A Regressive Tax that Overtaxes the Middle Class and the Poor

Memorandum

To:          CEO Burrell Ellis and DeKalb Board of Commissioners

CC:        DeKalb County Taxpayers & Voter, DeKalb Delegation, DeKalb Board of Education, Media, and all appropriate parties

From:     Viola Davis with Unhappy Taxpayer & Voter

Date:      6/10/2012

Re:         T-SPLOST: A Regressive Tax that Overtax the Middle Class and the Poor

TSPLOST is a regressive tax that will overtax the middle class and the poor.  How?  TSPLOST gives the government the right to extend the 1% tax into areas such as food and possibly fuel through the fine print written within the legislation.  This is legislation that many of the elected officials neglected to read or to be educated about to inform their constituents - the public.

There is not an American out there that has not experienced the consequences of not reading the fine print of a contract.  If there is one thing attorneys and politicians have in common, it is writing contracts and legislations with fine print that caught the general public by surprise.

The Transportation Investment Act (TSPLOST) is a referendum we are due to vote on July 31, 2012.  We have identified several parts of the law that need to be clarified before the taxpayers and voters cast their vote.  We strive to make sure that the taxpayers and voters not experience adverse affects due to not knowing the full consequences of the law. The general public needs no more surprises where taxes are concern.

1.  Does TSPLOST increase the 1% tax on food, fuel, and other areas that taxpayers and voters do not presently pay the 1% tax?  If yes, please inform the taxpayers and voters of the different areas by giving examples and identifying the tax increase such as food tax increase from 3% to 4% in DeKalb County.

The Department of Revenue gave the following notice on April 1, 2002:

On October 1, 1996, the State of Georgia reduced the 4% state sales tax on “eligible food and beverage” to 2%.  This was the first step to phase out State Sales Tax on eligible food and beverage over the next two years.  On October 1, 1997, the rate on food and beverage was reduced to 1%.  On October 1, 1998, no sales tax will be charged on eligible food and beverage.  Local Option Special Purpose, Educational, and MARTA Sales Taxes will still have to be collected except for the Homestead Tax (DeKalb and Rockdale Counties) and the Local Option Tax in Taliaferro, Webster Counties, and any future Local Option Tax. 

https://etax.dor.ga.gov/salestax/fdcomply.aspx

During the 2010 Legislative Session, House Bill 1221 was passed by the Georgia General Assembly and signed by the Governor. Effective January 1, 2011, House Bill 1221 provides enabling legislation conforming Georgia’s sales and use tax laws to the requirements set forth in the Streamlined Sales and Use Tax Agreement.  The legislation also eliminated the Homestead Options Sales Tax (HOST) exemption on food and food ingredients, effective January 2011 thus increase the food tax 1% in the following areas:

• DeKalb - Previous 1% exemption for the Homestead Option Sales Tax
• Rockdale - Previous 1% exemption for the Homestead Option Sales Tax
• Webster - Previous 1% exemption for the Local Option Sales Tax
• Taliaferro - Previous 1% exemption for the Local Option Sales Tax
• Muscogee  - Previous 1% exemption for the 2nd Local Option Sales Tax
•  http://www.scribd.com/doc/96545640/HB1221-Taxation-of-Food-and-Food-Ingredients#page=4
• http://www.scribd.com/doc/96542356/DeKalbCountyREC-Findings-Recommendations-Final#page=11

On May 29, 2012, we asked every taxpayer and voter to contact every elected official they knew and ask the following question:

• Does a vote for T-SPLOST increase the food tax?
• http://www.crossroadsnews.com/pages/full_story/push?blog-entry-Does+a+vote+for+T-SPLOST+increase+the+food+tax+1-%20&id=18749459

The reason was due to the section below in the SPLOST guidebook which stated the following:

• SPLOST is an optional one percent county sales tax used to fund capital outlay projects proposed by the county government and participating “qualified municipal” governments.  County and municipal governments may not use SPLOST proceeds for operating expenses or maintenance of the SPLOST project or any other county or municipal facility or service.  Technically, the SPLOST is levied in what the law refers to as a special district comprising the entire territory of the county calling for the SPLOST.
• The tax is imposed when the county board of commissioners or sole commissioner calls a local referendum (i.e., vote) in conformance with O.C.G.A. 48-8-111 and the referendum is subsequently passed by the voters within that special district (i.e., county).  The tax is collected on items subject to the state sales and use tax within the county, including the sale of motor fuels as defined in O.C.G.A. 48-9-2.  The SPLOST is also imposed on the sale of food and beverages, which are not subject to the state sales tax [O.C.G.A. 48-8-3 (57) (D) (i)] http://www.scribd.com/doc/96526026/SPLOST-Guidebook#page=9

Soon after making the request, we started to notice an increase in the disclosure to the public that T-SPLOST applies to the food and other item.  Unfortunately, these facts have been hidden behind very complicated legal jargon, like the fine print on a predatory contract.

2.  Does TSPLOST increase Georgia taxpayers and voters gas tax?  If yes, what affect will the increase have on every day consumers who are presently struggling to make ends meet?

The news report on Friday, June 8, 2012 stated Governor Deal will freeze Georgia’s gas tax.  Could this be because he, along with the elected officials knew that TSPLOST will increase the motor fuel tax as well as the food tax?  Does TSPLOST increase the tax on motor fuel for the general public?  The public do not have a full understanding of which items will be affected with a vote in favor of TSPLOST. 

This is the reason the public trust of our elected officials is at an all time low.  How can we trust the elected officials to spend the T-SPLOST funding in the best interest of the public when we are told half truths?  We request the same standards from our elected officials as the courts request of the general public to include:  “the truth, the whole truth, and nothing but the truth.”

http://www.wsbtv.com/news/news/local/gov-deal-freezes-gas-sales-tax/nPPjQ/

3.  Does TSPLOST apply to every city in Georgia?  If not, which cities are not required to pay the 1% tax increase of TSPLOST?

The law also spoke of SPLOST applying to “qualified municipalities”.  While all counties are automatically eligible to receive SPLOST funds, a municipality must be a “qualified municipality” as defined in O.C.G.A. 48-8-110 to be eligible.  Qualified Municipalities – to be “qualified”, a municipality must provide three of the following twelve services directly or by contract:

 •          Law enforcement

•           Fire protection (which may be furnished by a volunteer fire force) and fire safety

•           Road and street construction or maintenance

•           Solid waste management

•           Water supply or distribution or both

•           Waste water treatment

•           Storm water collection and disposal

•           Electric or gas utility services

•           Enforcement of building, housing, plumbing, and electrical codes and other similar codes

http://www.scribd.com/doc/96526026/SPLOST-Guidebook#page=10

According to Georgia Municipal Association, the total number of cities in Georgia is 535.  How many of these cities are identified as “qualified municipalities”?  We want to make sure that there are no cities pushing the TSPLOST that are not “qualified municipalities”.

DeKalb County has endured a tax increase of 26% on July 12, 2011. The county continues to have one of the highest debts among Georgia counties, more than the next two highest-borrowing counties, Fulton and Gwinnett, combined, according to Moody’s data.  This information was presented in an Atlanta Business Chronicle article titled, DeKalb’s $469 million debt highest among Georgia counties, by Kat Greene (July 29, 2011).

1.  http://www.bizjournals.com/atlanta/print-edition/2011/07/29/dekalbs-469-million-debt-highest.html?page=all
2. http://www.ajc.com/news/dekalb/how-dekalb-wound-up-1016946.html

The debt combined with the increase in local taxes places more stain on the taxpayers and voters especially property owners.  When we take into account the massive increase in sales taxes in DeKalb County, the middle class and poor will soon bear a heavy cost of paying the tax increases.  We make the following illustration:

• 1% - MARTA Tax extended in April 2007 without a referendum for additional years until 2047.
• 1% - ESPLOST approved the extension on November 2011 for an additional five years.
• 1% - HB1221 on January 2011 to eliminate tax exemption on food and increase the food tax from 2% to 3%.
• 26% tax increase July 12, 2012 on DeKalb County, Georgia.
• 1% - TSPLOST to include 1% on sales tax from 7% to 8% and 1% on food tax from 3% to 4%.  We are unable to include the motor fuel tax until we verify our documentation.

The taxpayers and voters of DeKalb County are bombarded with increase taxes and fees from several different governmental agencies and departments.  The DeKalb County School System has also threatened to increase the millage rate by 1-2 mills.  We need an honest forecast of the financial viability of the county.  With the DeKalb County local government and school board initially refusing to perform forensic audits and reorganizing their agencies, the taxpayers and voters have once again suffered through mismanagement and poor oversight.  It is unfair to set such high tax levels without elevating transparency, ethic, and accountability.

We ask that every elected official answer the following three questions with the truth and fully inform the general public to fulfill their fiduciary responsibility to include transparency, ethics, and accountability to the public.   

Sincerely,

Viola Davis

Community Missionary