Two local Republican legislators were major players in the passage last week of a controversial new tax on all hospitals.
House Bill 307, cosponsored by Republican Rep. Matt Ramsey of Peachtree City, was approved with modifications by the Georgia Senate last week, where Republican Senator Ronnie Chance of Tyrone voted in favor of the bill.
Chance is chairman of the Senate Finance Committee. Ramsey is one of Gov. Sonny Perdue’s floor leaders in the House of Representatives. Perdue strongly favored the original hospital tax bill, but has objected to the Senate changes.
The modifications resulted in the amended bill going back to the House.
Several Republicans voted against the tax bill, including Sen. Mitch Seabaugh of Coweta County, the majority whip in the Senate.
The bill — pushed by Gov. Perdue — creates a new “hospital tax” of 1.45 percent of net patient revenue at all Georgia hospitals whether they are for-profit or non-profit.
The revenue is needed to address a more than $300 million shortfall in the state’s Medicaid program for the upcoming fiscal year, according to a Senate spokesperson.
A portion of the hospital tax revenues will be used as matching funds for federal Medicaid funding, officials said. Another portion will be deposited into the state’s indigent care trust fund; yet another portion will be used to fund a Medicaid reimbursement rate increase of more than 12 percent for hospitals, officials said.
The bill is not yet headed to Gov. Perdue for his signature because the Senate changes to the bill must either be approved by the House or some sort of agreement must be reached between the two chambers.
The Senate change to the bill added language that would allow insurers to have an exemption from state premium taxes, but not local insurance premium taxes. That exemption would only kick in the year after the state’s revenue shortfall reserve reaches $500 million or more.
House leaders have objected to the Senate changes in the bill, so it remains to be seen if a version of the legislation will gain approval from both chambers required before it can be signed into law.
The tax would be applied to both for-profit and non-profit hospitals, officials said.
While one speaker on the Senate floor claimed the hospital tax was not a tax, the net affect of the bill is likely to result in increased hospital costs for Georgians.
The Senate also passed a separate House bill with several tax cuts and job creation incentives that will be going to Gov. Perdue for his signature.
One facet of HB 1023 creates a tax credit of between $25 and $125 per person for up to four consecutive quarters for employers who hire someone from Georgia’s ranks of unemployed residents. The tax credit would apply towards a company’s unemployment tax and could only be used for four consecutive quarters by any given company.
Chance, a sponsor of the bill, said in a news release that the incentives “have a proven track record.”
“We must utilize free-market solutions and incentives to grow the private sector and lead Georgia to economic recovery,” Chance said. “Taxation and regulation only work against economic growth.”
Other tax credits and incentives offered through the legislation are:
• “Angel Investor” tax credit: An income tax credit for investment made in small or start up Georgia businesses with 20 or fewer employees. The income tax credits would be available after two years of investment. The total “Angel Investor” tax credit pool would be limited to $3 million per year (adjusted for inflation).
• Elimination of the Net Worth tax: The net worth or intangible tax is a hold over from a 1930’s law that taxes wealth accumulation. Georgia is one of a handful of states that still retain it.
• A triggered 25 and 50 percent reduction of the Capital Gains tax for all Georgia taxpayers: Georgia currently has the second highest Capital Gains tax in the southeast, with two of our neighboring states at zero percent, according to a Senate news release. The corporate and individual capital gains tax rate will be reduced by 25 percent for the first year the revenue shortfall reserve reaches $1 billion; the rate reduction will be 50 percent for the next year.