ATLANTA — Georgia residents who lease vehicles will pay less in taxes under a proposal that could deal a major blow to the state budget over time.

But other decisions — such as whether a used car driven off the lot should to be taxed the same as a new car, effectively raising that tax — will have to wait.

A measure being pushed through the General Assembly earlier this year sought to fix several perceived shortcomings of a sweeping 2012 law that abolished the unpopular so-called birthday car tax.

Lawmakers settled for tackling just one of those issues. The change would reduce the tax on leased vehicles to just the payments made on the car, or the life of the lease.

Right now, motorists who lease pay a tax based on the full-market value of the car, which was an unintended consequence of the now five-year-old law that “all but killed leasing in Georgia,” said Rep. Shaw Blackmon, R-Bonaire, who carried the measure.

But the proposed fix comes at a cost. The state could lose as much as $227 million and local governments as much as $161.3 million over the next five years, according a report from state budget analysts. The bill now awaits Gov. Nathan Deal’s signature.

“I got more emails about HB 340 than anything else this session,” said Sen. Chuck Payne, a freshman legislator from Dalton.

Many of those emails, he said, were from local used car dealers who said other changes to the law would threaten their survival.

Payne was among those who saw the measure as a tax increase on the poor.

“Ultimately, the buyer is going to pay that tax,” Payne said. “The dealer is not going to eat a loss on a car just because the state of Georgia taxes them for a $5,000 car when they sold it for $2,500.”

An earlier version of the proposal called for requiring dealers to value a used car based on the sales price or the book value, or the greater of the two. Right now, the transaction price is not a consideration.

But Blackmon said he questioned whether low-income car buyers would really be the hardest hit by his proposal. More analysis, he said, is needed before “before we start assuming who purchases used cars versus new cars.”

“I think we all know people who purchase used cars who can certainly afford the (the tax) and there are probably people who purchase new cars who are paycheck-to-paycheck,” he said.

Blackmon said his plan would require used cars bought at dealerships to be treated the same as new ones, just as they were before the 2012 the law.

“I’m not for raising taxes on anybody, but you’ve got a fairness issue,” Blackmon said. “You’ve got all 49 states that tax new and used cars exactly the same, and Georgia’s the only state that doesn’t.”

There is also evidence, he said, that some dealerships are taking advantage of what he called a loophole in the law.

Blackmon provided this example: A car with a book value of $10,000 is being sold on the lot for $15,000. The dealer bumps up the selling price to $20,000 and offers $10,000 for a trade-in valued at $5,000. With a $10,000 value and a $10,000 trade-in, there is no tax.

“It’s not ethical, but it’s legal based on the current law,” Blackmon said.

It’s unclear how widespread the practice he used as an example is, so it is not known how much additional revenue would be collected if the loophole is eventually closed.

The change to used cars, though, is expected to yield considerable new revenues, although budget analysts caution that it is difficult to forecast this with any certainty.

Anywhere from $208.6 million to $640.2 million in state revenue could be raised over five years. The new local revenue could be between $133.8 million and $410.2 million.

Without such revenue increases to offset the cuts, changes such as the one offered for leased vehicles can hamper the state’s ability to function, said Wesley Tharpe, research director with the left-leaning Georgia Budget and Policy Institute.

“Even for those policy changes that may make sense, there is a sizable price tag that comes with them,” Tharpe said. “And that could compromise other priorities for the state, such as to adequately fund schools and health services and any number of vital services.”

Blackmon noted that an earlier version of the measure included both tax cuts — such as a cap on the tax bill new Georgians receive when they register their car here — and revenue-boosting changes to help offset those losses.

But legislators couldn’t reach a consensus on those other items this year.

It was better to wait, Blackmon said, than make an 11th-hour decision. He said work has already started on revamping the proposal for when lawmakers return to the Gold Dome next January.

Blackmon said figuring out a fix to how the revenue is distributed is especially important and what he initially set out to accomplish this year. His proposal would have sent more money back to local governments, several of which have lost funding since the 2012 law was passed.

Amy Henderson, communications director for the Georgia Municipal Association, said the rural areas of the state have been the hardest hit.

“The cities that are adding people and growing economies — it hasn’t been a bad impact on them,” she said. “It’s more of the rural areas where the loss has been felt.”

Jill Nolin covers the Georgia Statehouse for CNHI’s newspapers and websites. Reach her at jnolin@cnhi.com.