Calling the state’s inventory tax “blatant double taxation and a deterrent to small business,” state Rep. Craig Gordon pledged to introduce legislation that would exempt the downtown retail corridor from the annual assessment.
“As you grow, adding employees and expanding your businesses, everyone benefits,” he told members of the Savannah Downtown Business Association on Wednesday. “But this tax is holding a lot of businesses back.”
A Savannah native who grew up in District 162 — which he now represents — Gordon said he has experienced Broughton Street’s resurgence and wants to see it continue.
He said state Rep. Ron Stephens, chairman of the state tourism and economic development committee, would join him in the effort.
Rather than take on the statewide legislation, he will focus first on crafting local legislation that would likely include River Street, Broughton Street and the Martin Luther King Jr. Boulevard corridor.
Ruel Joyner, president of the DBA, said the inventory tax — an annual ad valorum tax that covers everything in a business, from stock to computers, fixtures and office furniture — puts a severe strain on local small businesses.
“You pay tax on it when you buy it, you pay tax on it when you sell it and you’re taxed every year you have it,” he said. “It just doesn’t make sense.”
Georgia is one of only nine states that still has the tax, Joyner said.
“It’s not just creating hardships for businesses; it has forced some businesses to move across the river to South Carolina, where their inventory is not taxed this way,” he said.
Joyner cited Broughton Street business Levy Jewelers as an example of a business hamstrung by the tax.
“(Levy Jewelers) owner Lowell Kronowitz has a high-value inventory,” he said. “It’s not unusual for him to pay $150,000 to $200,000 in inventory taxes every year.
“While he’s not going anywhere, that’s money that could be used to expand, hire new employees and bring in more business.”
In fact, Joyner said, the city of Savannah is currently doing a study to look at what benefits the city might accrue if the money spent on inventory tax was invested into business growth instead.
“I think what they are going to find is we’ve been stepping over a dollar to pick up a dime,” he said. “And that’s not even considering the number of new businesses that might move into the area if this tax wasn’t in effect.”
Joyner said his organization is encouraged by the support and interest shown by the local legislative delegation, especially Stephens and Gordon.
“As business people, you already take risks,” Gordon said. “It’s our job as your representatives to make sure we’re helping, rather than hindering, your efforts.”