Before the fall SPLOST, here’s a bit of history of sales taxes in Georgia

“The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing.” — Jean Baptiste Colbert (French economist and Minister of Finance under King Louis XIV, 1619-83).

As the citizens of Fayette County contemplate the possibility of raising their sales tax rate to 7 percent, it might first be useful to review a bit of history about sales taxes in Georgia.

The first sales tax in Georgia was imposed in 1951, with a rate of 3 percent. It seems the state survived nicely enough on that rate until 1989. Budget difficulties not unlike those we see today motivated the legislature to raise the statewide sales tax to 4 percent on April 1, 1989. Four percent is what the statewide sales tax rate has been ever since.

But in 1989 some Georgians were already paying an extra 1 percent in sales tax to support the Metropolitan Atlanta Rapid Transit Authority, or MARTA. When MARTA was established, in 1971, the residents of Fulton and DeKalb counties voted to tax themselves an extra 1 percent for seven years, with the tax to drop to 0.5 percent afterwards, in exchange for much improved bus service, the construction of a rail and subway system, and a fare of 15 cents until the subway was ready.

When the rail system became ready to roll, fares went up to a normal level, but the Georgia legislature had by then modified the law so as to keep the MARTA sales tax at 1 percent. The Fulton and DeKalb citizens never got to vote on that. They still pay the 1 percent MARTA tax today. They can expect to pay it almost indefinitely, because MARTA could not issue bonds without a guaranteed source of revenue for the entire duration of the bonds, so the legislature extended the 1 percent tax until 2047.

Note that when the statewide sales tax was raised to 4 percent, in 1989, the Georgia legislature stated that part of the tax increase was intended to provide property tax relief. That same justification has been offered over and over, and it is still offered by sales tax proponents to this day.

In 1975, the legislature adopted the Local Option Sales Tax Act, giving each county in Georgia the authority to adopt a 1 percent sales tax (called LOST) so long as there is agreement between the county and the cities in the county on how to split the tax. The purpose of the tax was, you guessed it, property tax relief. In 1980, the law was amended to require one-time voter approval in all counties that had not yet imposed the tax.

Fayette County adopted this tax through a vote taken on May 26, 1981, when Fayette’s population was 30,000, with collections starting on Oct. 1, thus making the basic tax in Fayette County 5 percent. (While most counties have adopted this tax, Cobb County never has.)

An opportunity to get rid of this tax comes every 10 years, as the cities and county must renegotiate their splitting formula after the federal decennial census. If they can’t agree, the tax goes away. After some political huffing and puffing, in the end they always agree, and the citizens have no say. This tax too can be considered indefinite.

And then came an extra law to authorize the Special Purpose Local Option Sales Tax, or SPLOST, in 1985. A countywide tax requiring voter approval, this tax was designed for special projects, with its application limited to five years.

In the November 1992 election, Fayette County tried one of these to raise $4 million for its new county library. The voters took the bait. In April 1993 the county sales tax went to 6 percent for 9 months, and then reverted to 5 percent.

It was not until 1996 that the legislature allowed county school boards to raise money for schools through a SPLOST. That allowed counties to have two SPLOST projects going at the same time, one for the county and one for the schools, plus the LOST, making the potential sales tax as high as 7 percent.

Fayette County’s sales tax was then 5 percent. But it didn’t take long for other counties to get to 7 percent, perhaps making the residents of neighboring counties envious of Fayette residents, especially as Fayette people bought cars at out-of-county dealerships. (While Georgia’s sales tax applies at the place of purchase, there is an exception for cars, where the owner’s residence determines the tax rate.)

Fayette was experiencing rapid population growth at the time and needed more schools. Thus it didn’t take long for the Fayette school board to latch onto the idea of using the new law to pay for new schools, in spite of the obvious delay in collecting the tax money.

After the board arranged for a special election, scheduled for March 17, 1998, some residents wondered publicly, largely through The Citizen local newspaper, why school bonds had not been proposed, as a better solution.

This first school board SPLOST effort failed. As the law requires that 12 months pass before another SPLOST vote can be had, the school board had an opportunity to regroup. With much better planning (to be recounted later), the board scheduled another special election for Sept. 21, 1999, seeking to raise $90 million. But that failed again, with 5580 yes, 6015 no.

Eventually, after a change in the school superintendent, the board scheduled a school bond vote with the general November 2000 election, and that easily passed. Another school bond vote was later scheduled with the general November 2004 election, and that too passed.

All that left Fayette’s sales tax at 5 percent, until the voters approved raising their tax another 1 percent for five years, this time for road improvements, in the Nov. 2, 2004 election. The vote was 26,155 to 24,876. The tax rate became 6 percent on April 1, 2005, and 6 percent is where it remains today.

Until perhaps April 1, 2009, when it might finally go to 7 percent ... But that’s another story.

[Claude Y. Paquin, a Fayette County resident, is a retired actuary and lawyer who, upon graduation with a doctor of law with distinction degree from Emory University, received its Prentice-Hall award as the graduating student demonstrating the greatest proficiency in tax law.]