The Georgia House of Representatives has approved eliminating the state ad valorem tax on automobiles.

The measure also would freeze property tax values across the state at their 2008 figure, allowing only a 2 percent increase each year for residential property and just 3 percent for commercial property.

The bill now goes to the Senate for consideration, said Rep. Matt Ramsey, R-Peachtree City. If approved it must be ratified by Georgia voters in a November referendum during the general election.

Eliminating the auto tag tax, often called the “birthday tax” because it has been due on the car owner’s birthday, makes the largest tax cut ever enacted in Georgia, Ramsey said.

The bill, if approved, would save taxpayers $1 billion in 2010 and 2011 combined, Ramsey has said.

The bill requires the state to “make whole” the county, city and school agencies that would lose revenues from the tax elimination.

The final version of the bill was a far cry from the plan announced late last year by House Speaker Glenn Richardson, who wanted to eliminate all property taxes in Georgia, replacing them with various new sales and use taxes. But that plan received significant opposition from local governments who depend on property tax revenue to fund the operation of Georgia cities, counties and school systems.

Under Richardson’s plan, the taxes to fund those governments would be collected by the state and then transmitted to the local agencies, but some argued it would take away the agencies’ taxing powers.

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