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Does the Local‐Option Sales Tax Provide Property Tax Relief? The Georgia Case
Author(s) -
Jung Changhoon
Publication year - 2001
Publication title -
public budgeting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.694
H-Index - 30
eISSN - 1540-5850
pISSN - 0275-1100
DOI - 10.1111/0275-1100.00037
Subject(s) - liberian dollar , sales tax , ad valorem tax , property tax , value added tax , economics , indirect tax , per capita , revenue , tax reform , monetary economics , business , public economics , finance , population , demography , sociology
This study examines the effect of a one percent local‐option sales tax (LOST) on property tax level, millage rate, and total spending level in Georgia counties. The study covers a 13‐year period for 136 Georgia counties. The findings suggest that the law, which requires rollback of property taxes when the LOST is used, led to actual property tax relief as well as millage rate reduction. Regression results show that counties collecting the LOST tend to have per capita property taxes that are an average of $12 or 1.8 mills lower than counties that do not collect the tax. Whereas an extra dollar of LOST revenue provides about 28 cents in property tax relief, it leads to an increase in total spending of about 48 cents. In sum, the LOST has achieved the objectives of property tax relief, but on balance it is more an augmentation of than an effective substitute for property taxes in Georgia counties.