Georgia House Demonstrates that Tax Hikes are not Necessary, Expresses Commitment to Explore Alternatives to Tax Increases

WASHINGTON -- In a move that has taxpayers cheering, yesterday the Georgia House of Representatives voted against a proposed increase on tobacco taxes by a vote of 127-47. Yesterday's vote underlies the state House's commitment to explore alternatives to tax increases to cope with current fiscal budget difficulties.

Georgia, facing a $620 million budget shortfall this fiscal year, is one of 44 states that is facing overspending commitments that threaten taxpayers. Many states collected tax surpluses when the economy boomed in the late 1990s, but as the economy cooled and tax revenues dried up, these same states found themselves irresponsibly committed to spending money that did not exist.

"Raising taxes in a stagnant economy has never proven to be an economic success," cited Grover Norquist who heads Americans for Tax Reform in Washington DC. "At a time when workers and small businesses need every incentive to produce, tax hikes stifle economic growth and further exacerbate current budget crises."

Georgia is now exploring alternative methods of dealing with fiscal difficulties. One possible solution proposed by many economists is refinancing the state's tobacco settlement bonds. Economists predict that this refinancing would generate all of the revenue necessary to offset budget shortcomings without damaging the state's budget in the long run. Additionally, Georgia must reevaluate its fiscally promiscuous spending. As has been demonstrated by other states coping with budget shortfalls this year, cutting unnecessary costs and downsizing inefficiencies within the government can save millions of dollars of the state's budget.

"Hiking taxes is bad policy, especially in a stagnant economy," continued Norquist. "A tax increase on tobacco inadvertently raises overall costs in the state and further stifles the economic potential of its citizens."