Property taxes may be the most despised form of taxation, even more than income taxes. People often say they’d like to shift the tax burden toward sales tax, and away from property tax.
We have two 1% Special Purpose Local Option Sales Taxes (SPLOSTs) in Cherokee County, as do almost all Georgia counties. One pays for school facilities. The other is for local road work and other county facilities and equipment. Those taxes must be renewed by voter referendum every five to six years. Both will come up for renewal in the next two years, and it’s important that they are renewed. Without them, property taxes would have to increase substantially to continue to fund roads, schools and other facilities.
What we don’t have in Cherokee is an additional 1% Local Option Sales Tax (LOST) to help fund county operations and directly reduce the county’s maintenance and operation (M&O) property taxes. All but three Georgia counties have a LOST or similar Homestead Option Sales Tax (HOST). In spite of that, our county M&O tax rates are in the lowest 20% of all Georgia counties, at 5.216 mills. But, they could be even lower.
A voter referendum is required to enact a LOST or HOST, and those taxes are permanent unless removed by a referendum. Either could make a big reduction in the county M&O tax.
Proceeds from a LOST must be used to roll back the county M&O tax rate equally for all types of properties. In Cherokee, the county M&O is about $600 on a property valued at $300,000. A LOST would reduce it by about half. Homeowners get first priority for tax rollbacks from HOST proceeds, so a HOST could eliminate fully the M&O tax for them. But, business and investment properties would get a much smaller reduction.
Neither a LOST nor a HOST helps with the school, fire or park bond property taxes. Those add up to about $2,700 per year on a $300,000 property. So, the current total tax bill of about $3,300 on that property only would drop to $2,700 to $3,000. It’s not such a big help when you look at it that way.
Households typically spend about 30% of their gross income on purchases subject to sales tax. Real estate and most services are exempt. Vehicles are now subject to a separate Title Ad Valorem Tax that’s not affected by a LOST or HOST. A family with $80,000 in gross income probably would pay about $240 more per year in sales taxes. That yields a small net savings with a LOST. The difference is made up by people from outside the county who make purchases in Cherokee. For homeowners, the net savings is more significant with a HOST.
I’m neutral on the LOST/HOST issue, not trying to persuade anybody either way. But, as always, I’m very interested in your opinion on this or other county issues. Please email me at email@example.com.
– Harry Johnston is chairman of the Cherokee County Board of Commissioners. He’s a retired CPA and accounting manager, and a former district commissioner.