HONORABLE HIRAM K. UNDERCOFLER Commissioner of Revenue State of Georgia 3-YEAR PROGRESS REPORT OF THE GEORGIA DEPARTMENT OF REVENUE 1963 - 1965 June 1, 1966 Honorable Carl E. Sanders, Governor State of Georgia State Capitol Atlanta, Georgia Dear Governor Sanders: The reorganization of the State Revenue Department along the most modern lines has been one of the major projects of this Administration and, as it is now operating, the progress made clearly points to the success of this program. During the period of this report, the Department has made a dramatic change in direction in organizing its activities to be able to collect anticipated revenues of the future with a maximum of efficienc;y and a minimum cost per dollar collected. In addition, enforcement of liquor laws and regulations required of the Department have been carefully analyzed and reorganization in these areas has been completed. Consistent with the Administration's pledge to provide new and expanded services in the fields of education, mental health, and highway development, the Department was faced with collecting an unprecedented amount of revenue to meet budget requirements. Aided by a booming national economy and a conscientious effort by each person in the Revenue Department to see that everyone pays his fair share of taxes, the pepartment has set new records in tax collections. I am extremely proud of the people of this Department for the fine attitude and conscientious effort which they have shown in making our progress possible, and I know that I speak for all of them in saying that we are proud to be associated with you and your Administration in the work of giving all Georgians a government of which they can be very proud. Sincerely yours, ~~~K~::~~ Commissioner of Revenue FOREWORD TIlE THREE YEARS IN REVIEW MARTIN B. ROBERTS Deputy Commissioner of Revenue FEW GEORGIANS REALIZE WHAT CHANGES have been taking place in the State Revenue Department since early 1963, when this Administration and the Department's new Revenue Commissioner, Hiram K. Undercofler, took office. One of the first decisions Commissioner Undercofler made ... the decision to "go-ahead" with installation of a modern electronic data processing system ... was far-reaching, and was carried out with dispatch by Deputy Commissioner Martin B. Roberts, as this Progress Report shows, and its impact upon the Revenue Department's capacity to serve Georgians of every walk of life in ever-increasing numbers with efficiency, thoroughness and speed during Georgia's unprecedented growth has been profound. The pictures below, contrasting the old and the new ways of doing things ... the manual versus the systems handling of countless detail ... typically portrays the changes taking place. As the new system becomes more sophisticated, so will the capacity of the Department grow in service to future administrations, legislators, and the people of the State. . MANUAL VS. ELECTRONIC Recommended Changes of The Governor's Commission on Efficiency and Improvement in Government WILLIAM R. BOWDOIN 1. The Commissioner should represent the Department to the Governor, to the Legislature, and to the taxpayers; the Deputy Commissioner should supervise day-to-day Departmental operations. Completed. 2. Legislation should be proposed to provide for liquor regulation in another or separate department. Suggested to Legis- lature; no action yet. 3. Eliminate the liquor warehouse system. Completed. 4. Separate, as completely as possible, alcoholic beverage con- trol and liquor tax administration from remainder of Department. Completed. 5. Attach inspection of petroleum products and vending equipment to the Motor Fuel Tax staff. Present arrangement working satisfactory and small advantage gained does not warrant cost of changeover and training. 6. Complete and codify: (a) regulations governing application of taxes and the policing of alcoholic beverages, petroleum products, and vending equipment. Laws and regulations for alcoholic beverages, Income Taxes, Sales and Use Taxes and Motor Fuel regulations have been bound and published. (b) procedures for department management. Procedures Manual has been established. 7. Establish a research staff to perform revenue analysis and estimation, tax law and tax administration studies, preparation of drafts of statistical reports. A Research Unit has been formed. 8. Lodge the budget and personnel work of the Department in the Executive Office. Completed. 9. Separate the field staff for alcoholic beverage control and taxation from other tax administration and manage independently. Completed. 10. Place the Department's field services for tax administration under a single management. Deferred. A complete study is needed before action. This is a radical departure frol11 tradi- tional operations and could have a detrimental effect. 11. Up-grade the field staffs for both tax administration and alcohol enforcement with principal emphasis placed upon up-grading the alcohol field men. The alcohol field staff has been evaluated and reorganized to provide more efficient operation. Merit system requirements and salaries have been up-graded for alcohol and tax field staffs. During 1964, the Merit System approved requests for up-grading 107 tax administrative jobs. 12. Give intensive personnel training to employees, some of it away from the Department in a university atmosphere. O~'er 12,000 hours of training have been given to department employees to upgrade their skills and prepare them for advancement. Career opportunities have been emphasized. 13. Integrate common services, i.e., handling of mail, proving formal accuracy of taxpayer declarations, filing and identification problems, and particularly data processing. Data processing has been centralized. We are considering central- ized mail handling, cashiering and' files, but no action has been taken yet. 14. Consider the enactment of the tax procedure code, providing for uniform requirements for penalties and interest in late payments; identical procedures for forcible collection. Requires extensive legislative review and subsequent changes, and this has been deferred to more immediate problems. 15. Give careful appraisal to distribution of emphasis, and hence budget support, among revenue Units with particular attention to reappraising property allocated to each Unit. This is under constant scrutiny. 16. Establish sufficient cross-checks within Department operation to develop facts for decision-making, and controls so that directives and coordinating instructions are fully observed in all Units of the Department. These cross-checks will be a part of our final systems design for EDP. We have more cross-checks now than when this recommendation was made; however, our systems are still in a state of improvement. 17. Provide a reorganization plan for implementing a unified administrative tax policy which will free tax administrators of duties concerned with procedural detail so that they may devote themselves to tax matters. Certain procedural details, such as purchasing, printing, supplies, and forms control, have been centralized. Others are under consideration. 18. Reorganization plan should include the most modern type electronic data processing system for tax accounting and statistics. This has been done. 19. Design a plan for implementing this data processing system and train employees for new activities as needed for transition to use of new system smoothly for Department and for individual employees. This has been done. 20. Define more clearly responsibilities among supervisors. The Procedure Manual and training courses have improved this area. 21. Investigate present law calling for peak loads of tax work on the Income Tax and Motor Vehicle Tax Units at about same time each year. Legislation might be suggested, after study, to make work load more stable. Discussed, but deferred for present. 22. State should consider .transferring responsibility for all taxes, i.e., excise taxes on insurance premiums and small loan taxes, to Revenue Department, and transferring items having flO tax administration significance, i.e., regulating petroleum products and equipment and the policing of alcoholic beverages, to other department. This subject addresses itself to the Legislature. 23. A sound personnel policy is the key to efficient revenue administration. Employees should be employed on a strictly merit basis and removed only for just cause. Compensation should be based upon a well-designed classification and pay plan at levels that will attract an adequate number of qualified workers and will provide sufficient incentive for retention and promotion. Personnel policies have been established in accordance with Merit System Standards and a Personnel Manual has been printed. 24. The Commissioner must establish and maintain high standards for personnel performance and that existing personnel be retained contingent upon passing qualifying. examination. Merit System examinations have been reviewed and upgraded. A performance measuring system has been designed and is now being tested. It is to be installed in all Units within a year. REVENUE COLLECTIONS ANO COST/COLLECTIONS RATIOS FOR FISCAL YEARS ENOING JUNE 3lI. 1960-67 NET REVfNUE COLLECTIO,U "",OR.O' 0' .'CUO", '2 / ;/ I ""."..V-- / ~ ...... ~ ~. /' '--ESTIM"TED~ I I .........,...,-~ I REVEHUE OEPARTMEIH RATIO COST/COLLECTIONS IN PERCENT ,/ "- ...... - ..-- -.. ~.ESTIMATEO-----.1 e~s;g ~~V~~~~e;O~~~~~~T Highlights Of Revenue Operations ) 1960 O_.A 6.1- 6-2- 6.3. 6.4. YEAR 65 66 67 1/65 REVENUE DEPARTMENT COSTS, COLLECTIONS AND COST/COLLECTION RATIOS YEAR COSTS* COLLECTIONS COST/COLLECTION RATIO I 1960 $ 5,452,000 $ 352,069,000 1.548 1961 . , . 6,543,000 374,449,000 1.747 $1),995,000 $ 726,518,000 1.651 II 1962 $ 7,220,000 $ 383,588,000 1.882 1963 . 8,635,301 422,490,000 2.044 $15,855,301 $ 806,078,000 1.967 III 1964 $ 8,063,160 $ 468,283,000 1.722 1965 8,350,000 523,583,000 (E) 1.595 $16,413,160 $ 991,866,000 1.658 BUDGET REQUEST IV 1966 $ 8,964,100 (BR) $ 589,000,000 (E) 1.522 1967 9,785,900 (BR) 623,000,000 (E) 1.571 $18,750,000 $1,212,000,000 1.547 INCREASE FOR BIENNIUM '66-67 OVER '64-65 AND RATIO IV -III . . . . . . . $ 2,336,840 $ 220,134,000 * - Costs do not include Loans to Counties for revaluation programs E - Estimated BR - Budget Request 1.075 Major Accomplishments 1. Installed and refined high-speed magnetic tape electronic data processing system. 2. Reorganized Alcohol Tax and Control Unit; investigated liquor monopolies in Atlanta; revised liquor regulations for better control. 3. Created new Motor Field Inspection Unit to check compliance with Georgia's statutes by trucking industry; cut down costs and manpower; up number of vehicles inspected per month. 4. Created new Interstate Tax Affairs Unit to study state-federal taxation problems and recommend courses of action. 5. Completely reorganized major tax producing units to adapt to use of data processing system; rewrote 90% of procedures. 6. Developed comprehensive Employee Training Program to develop career-mindedness and update skills; encourage promotion. Over 11,000 hours of training recorded during 1965. 7. Reorganized central supply in department; established print shop and recorded two-year savings exceeding $150,000. 8. Reorganized Motor Vehicle Title Unit; completed studies for mechanizing title operation. 9. Revised and published comprehensive Tax Guide; published regulations for Alcohol Unit, Sales and Use Tax Unit, Motor Fuel Unit; Income Tax Unit. 10. Designed, tested and installed system using Optical Scanner for processing Motor Vehicle tag registrations. 11. Studied feasibility of establishing a "mathematical model" of the department and refine data processing system to bring its capahility up to that of the "ideal system." 12. Installed first Employee Advisory Council in state government. 13. Reviewed departmental group insurance program, requested new bids and reduced employee's cost of insurance. 14. Combined Franchise Tax and Corporation Income Tax forms and simplified reporting requirements. 15. Developed plan for "Ideal" Revenue system. 16. Created new Motor Vehicle Interstate Reci- procity Unit to represent Georgia in growing area of overlapping laws. HIGHLIGHTS OF REVENUE OPERATIONS . .. (Continued) For Data-Processing... NEXT: THE 'IDEAL'SYSTEM Now that the four major incomeproducing Units of the Department ... Sales and Use Tax, Income Tax, Motor Fuel Tax, and Motor Vehicle Tax ... are using the magnetic tape equipment, planning to make the system more versatile is being pushed by Deputy Commissioner Martin B. Roberts. Newer computers and "data bank" systems have been researched and plans developed for their implementation. Optical scanners are to be added as well as random access electronic files. The latter are particularly useful in processing information received from Certificate of Title Section for use by law enforcement officers striking a death blow at auto thefts in the state. One such officer, Lieutenant Posey, head of the State Auto Theft Squad, said recently, "The work of the Title Section in assisting us in auto theft investigations is one of the principal reasons for our having reduced the number of stolen cars in the Atlanta area by over 900 during the 10-month period, January to August, 1965. "These cars had a value of $2,800,000 and when the Title Section is fully mechanized, converted to a data processing system, we'll have vital information at our fingertips ready for recall in less than a second. It's a wonderful thing." FRED CULBERSON Director Alcohol Control Unit Revised; Over 3,000 Stills Destroyed During 1965. Over 100 state revenue agents now in the field, directed by Alcohol Control Unit Director, H. Fred Culberson, veteran law enforcement officer, have been reorganized into a four-region staff, with district chiefs responsible for specific counties in the state. In 1964, agents were given statutory authority to make arrests of illegal liquor operators throughout the state and others involved in the transport and sale of moonshine liquor. They were armed for self-protection, when necessary. They received, for the first time in the history of the state, "college-level" training ... a thorough course conducted at the University of Georgia, by the Institute of Law and Government with the cooperation of federal officers, the U. S. Army, the G.B.I., the F.B.I., the State Patrol, and the Attorney-General's office. Following this training, they increased their efficiency by about 15%-raiding 3,174 stills during calendar 1965; destroying over 2,312,946 gallons of mash; arresting over 3,014 moonshiners and seizing 497 vehicles and other equipment. HIGHLIGHTS OF REVENUE OPERATIONS ... (Continued) Motor Field Inspection c-.. Section Ups Coverage: Lowers Personnel, Cost Requirements. In November, 1963, the motor carriers highway inspection phase of the Motor Fuel Unit field activity was combined with the Motor Vehicle License Unit's Field Inspection Section. The new Motor Field Inspection Section then was assigned to work with State Highway Department inspection teams. This action reduced the number of personnel required to enforce license and fuel regulations by twenty-five persons, and it resulted in changing thet number of inspection points required from forty-eight to sixteen; increasing the number of vehicles inspected per month from 4,500 to 14,000; and providing these inspection crews with scales and lights. During the twelve-month period following this section's formation, 2,205 citations were processed amounting to $627,456.76. A total of 135,375 trucks were inspected during this time. From January 1 to December 31, 1965, 1,990 citations were issued representing $344,008.31 with 128,572 trucks inspected. Motor Vehicle Title Section Faces Heavy Workloads This Unit has run into serious work load problems created by a large increase in the number of cars sold in the state and two new statutes recently passed by the Legislature-the Uniform Commercial Code and the Salvage Act. Under the Motor Vehicle Title Act, all 1963 model vehicles and all later models must be titled by this Unit after purchase, and by January 1, 1969, a certificate of title must be assigned to all vehicles in the state. The Uniform Commercial Code requires the Unit to record all liens received on cars older than 1963 models, and the Salvage Act requires records on salvaged vehicles. During 1964, this section processed 292,000 title applications and 263,000 lien and Security Interest notices; however, during 1965, the intake of title applications almost doubled, averaging about 40,000 per month. Fred L. Cox Is Director For Interstate Tax Affairs Fred L. Cox, who had headed the Department's Income Tax Unit, was appointed Director of Interstate Tax Affairs, on June 2, 1964. The appointment was necessary, according to Commissioner Undercofler, "because there are an increasing number of areas in which state-federal agencies overlap on tax matters ... areas which will probably be resolved in the near future. "Mr. Cox, a recognized authority throughout the country in the area of corporation tax matters, is ideally suited to represent Georgia in these matters." Georgia is taking a role in present discussions between Congress and the several states as to the proper manner for corporations with multi-state operations to be taxed. Murray A. Chappell Heads Motor Vehicle Interstate Reciprocity Unit. Commissioner Undercofler created a new unit, the Motor Vehicle Interstate Reciprocity Unit, in May, 1965, and appointed Murray A. Chappell, former Director of the Motor Vehicle Tag Unit, to direct it. The Unit is a necessary adjunct to Department operations because most states have reciprocity agreements with all others in the field of motor vehicle operation and taxation. The Unit will (1) compile all reciprocal agreements Georgia has with other states, including pertinent records needed to make agreements clear and understandable; (2) accumulate detailed statistics on trucking firms doing business in the state; and (3) suggest recommended action to improve this area of reciprocity. HIGHLIGHTS OF REVENUE OPERATIONS ... (Continued) E. J. OLMSTEAD Director Sales and Use Tax Adopts New Procedures; Increases Collections - Cuts Delinquencies Net collections by the Sales and Use Tax Unit for the 1965 fiscal year amounted to $207,564,075, an increase of $22,139,874 or approximately 12% over the comparable period last year. These increases were obtained at the same time that the cost of collections in this Unit were reduced for the first time to less than $1.00 per $100 collected. In its Office Operations, the Sales and Use Tax Unit began a modern delinquency control program during 1964 which reduced the number of delinquent taxpayers by 50%. A new system of commodity codes was also installed making it possible to produce economic statistics which were formerly not available. During 1965, quarterly filing was implemented for approximately 14,000 selected accounts, resulting in a 7% decrease in the cost of document processing and in considerable convenience to some taxpayers who were formerly required to file these reports monthly. In its Field Operations, through audits and examinations, the Unit is now collecting delinquent tax at a rate in excess of $6,000,000 per year, the maximum result thus far, without an increase in cost or the number of employees. During 1964, the Unit operated with some 8% less personnel in its field units; 5% less in its overall personnel levels. Rules and Regulations now published; continued examination of sophisticated electronic systems to be pushed in 1966. The publication of Sales and Use Tax rules and regulations will be widely received as an important educational benefit by assisting taxpayers, lawyers, and accountants in all areas to become familiar with the Department's interpretation of the law. New systems for processing tax returns and accounting for tax funds through the use of more sophisticated equipment, such as random access electronic files, will be pursued, resulting in a more simplified system of reporting for taxpayers and more economical methods of processing returns. Three out of four applications for machinery exemption approved under statutes of the General Assembly. Applications for Certificate of Exemption on machinery for new or expanded plant, from April. 1, 1965, to December 31, 1965, are as follows: APPLICATIONS Denied: 177 Approved: 450 Pending: 21 648 PURCHASES INDICATED $ 51,442,189 252,840,862 4,368,858 $308,651,909 TAX INVOLVED $1,543,266 7,585,226 131,065 $9,259,557 3 YEAR PROGRESS REPORT OF THE GEORGIA DEPARTMENT OF Just how fair is Georgia's tax structure? How do Georgia's taxes compare with other southern states? Do corporations resist settling here because the tax structure. is unfair as compared with those of neighboring states? People who ask, "Is Georgia really becoming a leader among southern states? Is she sharing in the gains of the booming economy? Is she gaining any ground on those states thought to be the pacesetters in this region?" REVENUE u~~u~ RESEARCH STUDIES TELL THE TRUTH ABOUT GEORGIA'S TAXES! In data compiled by the Revenue Department's new Research Section, the answer to these and other questions becomes abundantly clear. To begin with, Georgia showed a 31 % increase in total personal income from 1960 to 1964. This rate of gain placed the state ahead of Florida (30.5%), Mississippi (30.4%), North Carolina (30.0%), Tennessee (28.5 % ), South Carolina (28.2%), and Alabama (24.4%) during the same period. In addition, Georgia's 31.0% was far better than the national average (23%) for the period. With more dollars in hand in 1964, Georgians (Continued on next page) CHANGES IN TOTAL PERSONAL INCOME, 1960-1964 GEORGIA, NEIGHBORING STATES AND U. S. 30.5% increase 31.0% increase 30.4% increase 30% increase 28.2% increase 28.5% increase 23.0% increase 24.4% increase u.s. ALA. FLA. GA. MISS. N.C. S.C. TENN. 250 250 AMOUNT TAX DOLLARS PAID PER CAPITA (STATE AND LOCAL TAXES PAID IN DOLLARS) 221 200 156 150 174 176 169 154 146 100 50 o u.s. ALA. FLA. GA. MISS. N.C. S.C. TENN. (Continued from page I) paid an average of only $174 per person in state and local taxes, ranking near the middle as compared with six other neighboring states, and well below the $250 per capita average for the United States. Converting taxes in dollars paid to percentage of personal income paid out in 1964, Georgians paid about 9.0% of per capita income for state and local taxes as compared with 10.7% in Mississippi and 9.7% for the country as a whole. (Continued on page 3) 10 9.7% 9 8 7 6 5 4 3 2 1 o u.s. TAXES AS PERCENTAGE OF PER CAPITA INCOME 10.7% 9.8% 8.9% 9.0% 9.2% 9.1% 8.8% ALA. FLA. GA. MISS. N.C. S.C. TENN. Booming Economy Boosts Tax Revenue, But Georgians Pay Less Taxes Than Most Americans Aided by a booming economy and the reorganization of the Revenue Department along the most modern lines, total state tax collections jumped from $443 million in fiscal 1963 to $548 million in fiscal 1965. This increase was $106 million in money or 23.9%. Georgia was thus sharing in the growth of the economy much better than most other southern states and ranked second after Florida ($170 million) in revenue gains. Georgians paid about $18.95 more per person in state taxes in 1965 than in 1963; however, in terms of taxes paid per $1,000 of per capita income, Georgia's increase in the two-year period was second lowest in the seven-state region. This chart also shows the average amount each Georgian paid in dollars on each $1,000 earned. In 1963, Georgians paid about $61.44 per $1,000 of income and $64.78 in 1965, an increase of only $3.34 per thousand dollars earned. On the other hand, Florida tax payments by individuals increased by $8.00 per thousand dollars earned. Corporations Fare Well In Georgia In fiscal 1964, corporations paid $44 million dollars in income and franchise taxes to Georgia or about 8.9% of the State's tax revenues for that year. North Carolina coilected $77 million, or about 12.4% of her revenue, from this source during this period, and Tennessee about $39 million or 9.7% of state revenues. In Alabama, this figure was $29 million, representing 7.5% of total state tax revenues. Georgia's corporation tax rate of 5% is also competitive among the 37 states (plus the District of Columbia) that collect a corporation income tax. Figures show Georgia lies exactly at the median among these states, i.e. eighteen states have rates higher than Georgia's and eighteen have lower rates. This chart further shows how Georgia's corporation tax rate compares with other neighboring states. As an incentive to new industries to locate here or for established industries to expand, the Georgia General Assembly passed a law permitting sales and use tax exemptions on machinery for new or expanded plants. The State Revenue ,Department reports a total of 648 applications for certificate of exemption under this law have been received through December 31, 1965. Of this number, 450 applications involving over $250 million in purchases (about 81.5% of the dollar value) were granted. Some 177 applications involving $50 million in purchases were denied for not meeting exemption requirements and 21 applications involving some four million in purchases were still pending. (Continued on back page) GEORGIA'S TAX REVENUE GAINS SECOND BEST IN THE AREA STATE TAX COLLECTIONS, FOR GEORGIA AND OTHER STATES: FISCAL YEARS 1963 AND 1965 (Millions of dollars) State(s) 1963 1965 P Change, 1963 to 196~ Money Percent Georgia 443 548 Alabama 327 414 Florida 592 762 Mississippi 222 266 North Carolina 589 688 South Carolina 264 309 Tennessee 352 434 106 23.9 87 26.6 170 28.7 45 20.1 99 16.9 45 17.2 82 23.2 *These figures represent total State tax receipts; In Georgia, the Revenue Department collected some 95.5 percent of the total in 1965. Source: U.S. Bureau of Census BUT WE FARED BETTER THAN ... STATE TAX REVENUES PER CAPITA, 1963 AND 1965: .GEORGIA, NEIGHBORING STATES AND THE U.S. (Dollars per capita) State Fiscal yea rs Change, 1963 to 196' 1963 1965 Amount Percent All 50 States Georgia Alabama Florida Mississippi North Carolina South Carolina Tennessee 117.81 106.91 97.82 104.77 96.80 123.65 106.35 95.32 135.24 125.86 119.69 131.43 114.74 140.01 121.75 112.84 17.43 14.8 18.95 17.7 21.87 22.4 26.57 25.4 17.94 18.5 16.36 13.2 15.40 14.5 17.52 18.4 Source: u.s. Bureau of the Census PEOPLE OF MOST SOUTHERN STATES! PER CAPITA STATE TAXES PER $1000 OF INCOME, 1963 AND 1965. GEORGIA, NEIGHBORING STATES, AND THE U.S. (In dollars per capita) Per capita State taxes per $1,000 of per capita incomeo State 1963 1965 Change All 50 States Georgia Alabama Florida Mississippi North Carolina South Carolina Tennessee 49.77 52.70 2.93 61.44 64.78 3.34 63.19 68.43 5.24 50.35 58.35 8.00 75.80 79.79 3.99 71.64 73.19 1.55 69.56 73.56 4.00 56.87 60.70 3.83 Source: u.s. Bureau of the Census REVENUES FROM CORPORATION INCOME AND FRANCHISE TAX, FISCAL 1964 80 (IN MILLIONS) 77 70 60 50 40 ...:-0 I I 39 30 29 20 10 o ALA. 20 2* O U D t.,....~'! - ~~ ... FLA. GA. MISS. N.C. S.C. TENN. CORPORATIONS FARE WELL IN GEORGIA (Continued from page 3) Industrial location studies show (1) Georgia's tax income is balanced relatively well between general sales taxes, income taxes and other tax sources; (2) that Georgia's tax structure is competitive with those of neighboring states; and (3) that Georgia's more consistent, responsible political climate, its equitable administration of taxes; and provision for trained manpower (Georgia's technical-vocational school network is statewide now) are important factors considered by corporate management in plant location studies. Revaluation Quietly But Firmly Pushed Since 1961, when the Revenue Department began administering funds to aid counties in revaluation programs, 94 counties have completed these programs or are in process of revaluation. Thus, the tax burden in these counties has been more equitably shared, and county administrations have been more able to provide essential services through an increased bonding capacity. A uniform assessment ratio of 40% of fair market value will soon be set by State Revenue Commissioner Hiram K. Undercofler under a court order brought to remove inequities existing between counties in the state. The Georgia General Assembly passed a law deferring this action until 1967. Tax Department Has Improved Service A new attitude of service to the taxpayer now prevails in every Revenue Unit. Refunds are now processed by data processing equipment and thousands of checks are being mailed as early as the last week in January ... if the taxpayer has filed his return free of errors. In other tax areas, Department field units have increased collections and improved service throughout the state; motor vehicle title applications have been greatly expedited; tax forms have been simpli- fied; and many business returns for sales and use tax are now filed quarterly instead of monthly. When Benjamin Franklin was writing to a friend one day, he made a statement that has become a great truth: . . . "In this world nothing is certain but death and taxes." It's true that taxes will always be with us, but the facts now show that Georgians are paying no more than people in most of the neighboring states, and as compared to many of them, Georgians are paying a good deal less. The facts also show that Georgia now stands consistently among the top three in the southeastern region in economic gains and that she has as much to offer new industry, if not a great deal more, than her southern neighbors. GEORGIA CORP TAX RATE-5% 2%4.09% 5.01%6% IND. MO. N.J. N.M. ALA. IOWA IIAN. LA. MISS. OKLA. ARIZ. KY. N.D. TENN. UTAH ARK. COLO. D.C. DEL. MD. VT. CALIF. MINN. N.C. IDAHO R.I. AlASKA MASS. S.C. VA. CONN. MONT. ORE. PENN. N.Y. HAWAII WISC. Georgia's income tax rate for Corporations is fair. 18 states tax .t higher rate and 18 states tax at a lower rate. Georgia is approximatel)' in the middle among states taxing corporation income. For reprints of this report, please write or phone the Information Office, State Revenue Department, Room 605, Old State Office Bldg., Atlanta, Ga. 30334. HIGHLIGHTS OF REVENUE OPERATIONS ... (Continued) HOKE .S. BELL Director Income Tax Unit Processes 1,150,000 Returns; Tops $100,000,000 Through the closing date of December 31, 1965, the Income Tax Unit processed 1,019,635 tax returns as compared to 864,490 returns of the previous year. This was an increase of 155,145 processed returns. Through the fiscal year ending June 30, 1965, over $100,000,000 was collected tor the second time in the history ot the State. Total gross collections reached a record high of $112,356,612, up $12,503,206, or 23.7%. These collections were increased due to better enforcement methods, better administration of the Income Tax Act along with a growing economy in the State and Nation. These greater collections were achieved even though the Unit was operated with fewer employees for the past two years. The new electronic data processing system holds the key to rapid detection ot delinquent employers who withhold taxes from employees' salaries and fail to forward them to the State. It is estimated that col- lections close to $500,000 or more a year will be received through enforcement of this provision of the law. A test program utilizing one man to closely check on delinquent taxpayers in this category for a six-months period produced over $75,000 in revenues for the period. Finally, a match of Federal tax returns was made in 1964 to determine what percentage of Georgia taxpayers earning $10,000 or more were filing Federal returns and not filing State returns. This study covered 68,000 Federal taxpayers and revealed that 1,315 Georgians had failed to file tax returns and pay taxes, including interest and penalties. Income tax laws and regulations were revised and printed in booklet form for the first time since 1957, and a comprehensive review of regulations, forms and other procedures to eliminate waste motion and save on time by taxpayers and Department employees has been planned. HIGHLIGHTS OF REVENUE OPERATIONS ... (Continued) No.1 Project: Develop Skills and "Careermindedness" Among Department Employees J. G. STITH Director Personnel Unit continues intensive personnel training and records program; expands statistical data concerning employee turnover and makes changes to improve employee processing. A government operates most efficiently and at a less cost when employees are well-trained; when advancement, based upon merit and consistency of performance, is forthcoming regularly; and when employee records are thoroughly and accurately kept. Because of these and other factors, employees develop "career-mindedness," one of the principal goals of this administration :md of the State's twenty-year-old Merit System for Personnel Administration. In the Revenue Department, the Personnel Unit has concentrated upon the development of a comprehensive personnal records system and upon training employees for advancement. The latter objective was given added emphasis when the Department adopted an electronic data processing system. As a result, many employees had to become oriented to new procedures and methods of operation. - Accurate budget control of personnel services and a list of Department vacancies was assured with the adoption of a new system for recording numbers and types of positions in each Unit of the Department. Also, position vacancies of over twelve months are periodically spotted and routed to the Unit Directors for recommendation for abolishment. Permanent employee history cards, with individual photographs, have been completed on all employees, and salary eligibility data has been put on a computer tape, thus producing a quarterly salary eligibility listing for all Units of the Department. The latter change resulted in a saving of forty man-hours per quarter, or one month per year. Listings of all employees eligible for permanent status are being sent to Unit Directors each month, a report of performance is completed and employees are recommended either for permanent status or dismissal. This is essential to effective personnel management because the working test period is considered a continuation of the Merit System examination process. Many procedural changes have been made during the period. Today, most procedures affecting personnel activity have been defined, and the implementation of these procedures has begun on the supervisory level. These areas include the following: Corrective Interviews; Requests for Promotion; Recommendations and Work Reviews Required for Granting Annual Pay Increase; Requests for Leave Withcut Pay; and Administration of Annual and Sick Leave. In addition to the above procedures, a plan for compulsory retirement has been defined; liaison between the State Merit System and the Department has been increased and coordinated; Units have been encouraged in the use of competitive and non-competitive examinations for promotions and the number of employees recommended for promotions greatly increased; and the organization of an Employee Advisory Council has been completed, the first such venture in State government. Particular emphasis has been placed on training within the Department, and many of the training programs being launched within the State have been pioneered here. Several of these training programs now form the basis for a continuous Revenue Department Training Program. These include: Employee Orientation: Offered to new employees at the beginning of each pay period; Management Seminars: Three-day instruction periods offered to all supervisory personnel in the Department; Basic Accounting School: For Tax Examiners and Tax Auditors; Receptionist Training: Training to Meet Public; Basic Introduction to Benefits of Employees' Retirement System: Offered to all employees. Up-grading personnel. Principal emphasis this year has been focused on reallocation of clerical pOSItIOns; revision of clerical job descriptions; and review of entrance salary and examination grading for Tax Examiner classes. During the fall of 1964, a reassignment of all clerical positions was indicated because of excessive turnover, upping the cost of training personnel for these positions. Following reclassification, during which entrance salaries were increased from $220.00 per month to $243.00 per month, turnover among this category was decreased by 75%. HIGHLIGHTS OF REVENUE OPERATIONS ... (Continued) ... ~. \ TOM BOND Director Miscellaneous Tax Unit Tops $50 Million for 1965 The Miscellaneous Tax Unit, which supervises the sale of beer, wine and tobacco (cigars -and cigarettes) had an increase in tax collections for the fiscal year 1964, for the three categories, over the preceding fiscal year of over $7 1/2 million. During fiscal 1965, this increase amounted to nearly $10 million dollars. Revenue in fiscal 1965 from the cigar and cigarette taxes was $35,443,216, an increase of $8,233,658 or 30.3% over the previous year. About half of this additional tax can be credited to the three cent per pack tax increase on cigarettes effective March 1, 1964, which brought the total State cigarette tax to eight cents per pack, or raised it from two and onehalf mills to four mills per cigarette. The 1964 collections include $404,732.04 in floor tax, which was collected on cigarettes in the wholesalers' and retailers' inventory on the effective date of the rate change (March 1, 1964). Floor tax collections resulted from notices sent to approximately 60,000 retail dealers, who paid the tax by means of a special rate form. Revenue from beer tax for the fiscal year 1965 was $13,667,917, an increase of $1,373,503 or 11.2% over the previous year. Part of this additional tax can be credited to the tax increase on beer also effective March .I, 1964. The 1964 collections of $12,294,413.70 include $156,559.92 in floor tax, which was collected on beer in the manufacturers' inventory, including unused tax-paid crowns on the effective date of the rate change. A survey shows that beer consumption in Georgia has increased over the past five years. Among the reasons for a higher consumption are: (l) A rapidly growing population; (2) relatively higher per capita income; and (3) the increases in the number of beer licenses issued by municipalities arld county authorities. Property Tax Unit Pushes Revaluation Programs In 1965 Through December 31, the Property Tax Unit now reports that fifty-one counties have completed revaluation programs and another forty-three are in the process of revaluating for a total of ninety-four counties or about 60% of the 159 counties in the State. During this administration, revaluation has been actively supported and strongly recommended to county and municipal officials. Only twenty-four counties had revaluated prior to the beginning of this administration's term of office in January, 1963, even though State financial assistance has been available since 1961. Thus, only 15% of Georgia's counties had revaluated during the first two years that financing was available. However, since that time, seventy counties have completed or begun revaluation programs or about 75% of those since the start of the State Assistance program. From our best information, Georgia is leading the southeast, if not the nation, in state-wide revaluation programs, and the insistence by Property Tax Unit officials that qualified revaluation firms be employed to prepare the digests has resulted in considerable progress as well as quality programs. The progress made in Georgia has caused many state officials to express amazement throughout the country, and our contract, used between evaluating companies and counties, is widely sought by other state taxing officials. THOMAS I. SANGSTER Director CHARLES HARDEN Director Fuel Oil Laboratory Unit Modernizes During the past two years, the progress in this Unit has been evidenced in several ways. While the volume of work has not changed, the Unit has been able to analyze petroleum products more thoroughly. This Unit serves the public by protecting it from short measure, inferior products, and on many occasions, determining the cause of difficulties arising from the use of petroleum products. Twenty inspectors test approximately 9,000 pumps per month; secure 1,000 samples of petroleum products per month for analysis. At present, there are 37,000-plus pumps and 12,500 service stations within the state. A mobile calibrating unit and a new laboratory have greatly increased the capacity of the Laboratory to inspect and analyze fuels. Fraud and Intelligence Unit Extends Pre-employment Checks The activities of this Unit have been concentrated in three important areas during the past three years: (1) the pre-employment investigation of all employees appointed to jobs within the Revenue Department; (2) the investigation of all Department personnel for honest and faithful performance of duty as required by law; and (3) investigation of persons suspected of defrauding or conspiring to defraud the state of tax payments required under the law. In addition, the Unit makes special investigations as required; investigates charges of misconduct made against employees by others in the state; investigates alcohol and tobacco tax violations where special considerations of department policy are involved. J. W. D. HARVEY, Director Controller Section Saves $150,000 Over 2-Year Span One of the initial cost-reducing projects adopted by the Revenue Department involved the creation of a new Print Shop to print over three and one-half million income tax forms per year and other forms and materials needed in the operation of the Department. The first year's results showed total printing costs were running 65 % less than those of the previous year, a saving of approximately $50,000 a year. Second-year savings were about $55,000. Coupled with other savings such as new procedures in bulk mailing, centralized supply system, and standardization of certain envelope types-a total savings amounting to almost $150,000 was realized in the first two years. WILLIAM E. STRICKLAND Director Income Tax Unit Adds New Corporation Section The 1963 Legislature passed a law requiring corporations to file Declarations of Estimated Income Tax. This act required the Income Tax Unit to set up a special section to handle these returns. During the year of transition, corporations made their regular payments and also filed anticipated returns amounting to $18,000,000 over a two-year period. These "windfall" collections were noted separately from total year-end collection figures reported by the Income Tax Unit in 1964 in order to maintain relative comparisons with collections for previous years. HIGHLIGHTS OF REVENUE OPERATIONS ... (Continued) HENRY B. NIEMEYER Director Motor Vehicle Unit Sells Over 2,000,000 Tags During the twelve month period, July, 1964, through June, 1965, the Motor Vehicle Unit issued 2,064,253 license plates and collected $21,499,420. This reflects an increase of 63,298 license plates and $222,380, when compared to the previous twelve months. This was the first time in the history of the State that the number of license plates issued exceeded 2,000,000. One of the primary objectives of the Motor Vehicle Unit during the past year has been the reorganization and staffing required to handle an unforeseen volume of motor vehicle titles filed with the Department in conformance with the Motor Vehicle Title Act. During 1965, 400,000 Certificates of Title were issued by the Title Section. Yet the real workload is still to come. For example, within the next two years the volume of titled vehicles in Georgia will double, and by 1968, the volume will almost quadruple the present figures. Thus, for the next three calendar years, 1966-68, the number of titled vehicles in Georgia will grow from some 700,000 to approximately 2,600,000, and by 1970 there will be ab.out 3,000,000 titled vehicles. Under the terms of the Motor Vehicle Title Act, all 1963 and later model vehicles must be titled. By 1969, all vehicles in the State must be titled. The Motor Vehicle Unit has been reorganized thoroughly around the use of the electronic data processing system installed by the Revenue Department. This action greatly reduced many manual operations and provided comprehensive statistical values by which to judge the unit operations. Preliminary results show a marked increase in efficiency has resulted. Tag items handled have increased 22.9% and Tag receipts deposited have jumped 32.8%. These improvements were accomplished without an increase in permanent personnel and without the use of temporary employees, an excellent illustration of the impact of electronic systems properly utilized JOHN H. BEARDEN Director Motor Fuel Unit Tops $100,000,000 Again! During the fiscal year ended June 30, 1964, $103,377,184.59 was collected, representing an increase of $5,283,166.28, or 5.39% over the preceding fiscal year. Concurrently, there was a slight decrease in refunds, primarily in the farm use area, where more extensive field investigations and better controls have been instituted. By June 30, 1965, this Unit had collected $107,002,126, up $7,120,225 or 7.1 % over net collections for 1964, the second year in a row in which $100,000,000 in receipts was topped. During the past twelve months all sections of the Motor Fuel Tax Unit were converted to the new computer system with more extensive utilization of equipment, creating more effective processing and better controls. It is also anticipated that additional refinements in programs and systems will be accomplished in the next twelve months. Fuel tax laws and regulations have now been rewritten; auditing major petroleum licensed distributors has begun; an Internal Electronic Data Processing Audit System. has been launched. This Unit has prepared for legislative action in 1966, a complete revision of the Motor Fuel Tax Laws to bring the State's application of the law more in line with present-day business practices of the petroleum industry as well as present utilization of petroleum products. Amendments to the present law on a piecemeal basis since their enactment in 1937, and an adverse opinion by the Court of Appeals relating to special fuels pointed to the necessity for this move. Unit auditors, now trained in auditing EDP systems, during the next few years, will audit all major oil companies with relation to their operations within this State. Such audits have never been performed by agents of this State or any other state because of the size and complexity of these large companies. Plans are to begin a study as soon as possible toward creating an internal system whereby auditing may be performed with information submitted by the taxpayer toward controlling receipts and disbursements of transfers of fuel by accepting information from taxpayers on EDP tape or card formats which may be utilized in the Department's system. This should create more effective checking on the part of the Department at less cost to the taxpayer. HIGHLIGHTS OF REVENUE OPERATIONS ... (Continued) Information Office Established; Tells Revenue Department Story Through Mass Media ... C. SHORTY LORENTZSON Director of Public Relations An Information Office was established early in January, 1963, to distribute information and facts to press, radio, and television newsmen and to the general public. To give working press and other media representatives full access to facts concerning the Department, the Information Office works closely with the Commissioner and Deputy Commissioner during end-of-month press conferences; prepares radio and newspaper releases; writes speeches, produces television film "clips" and assists media men in obtaining facts for articles or stories. This Department has been repeatedly praised by media representatives for its "open door" policy regarding news events and information. The Information Office also writes, edits, and produces Georgia ReveNews, employee publication; maintains active liaison between newspaper editors and publishers; television and radio management; various public relations staffs; and other Departments of state government. New Research Unit Formed To Give Department Tax and Economic Research Data The research group was formed during the early months of 1964 to provide professional staff services in the field of tax and related economic research. This involves collecting and analyzing data on tax revenues, preparing current statistical and information reports, and conducting special analytical studies concerning taxation in Georgia's revenues. Many requesrs for tax data from business firms, university and research personnel, and public agencies, were received and handled by the research group. For example, the staff instituted regular reporting of net collections by kind of tax to the U. S. Bureau of the Census, at that agency's request. The research staff prepared the Department's Statistical Report for the biennium ending June 30, LAMAR WHITE Director 1964. This work included organizing and presenting a great volume of complex data. The report also provided reader aids, such as a quick guide by tax subject and by administering unit, summary tables and accompanying chart, and interpretation of the main trends and recent developments in Georgia's revenue system. Prepared primarily for the information of the Governor and the General Assembly, the report also has been made available to other State agencies, local officials, libraries, and the taxpaying public. The research staff collected, organized, and edited the contents of the Department's first Tax Guide, a concise handbook of useful information about Georgia's tax revenue sources, tax rates, and taxpayer requirements. 3 YEAR PROGRESS REPORT OF THE GEORGIA DEPARTMENT OF