Excise tax could replace new exemption for Augusta manufacturers

A new sales tax exemption for energy used in manufacturing – a boon for factories in manufacturer-heavy Augusta – promises to make the state more competitive, but its impact on local sales tax coffers remains uncertain.

 

The exemption, which does not apply to collections for Richmond County Board of Education or the new transportation sales tax, came with a built-in alternative: the option for local governments to levy a new excise tax on energy used in manufacturing to replace the lost revenue.

When they meet at 4 p.m. today, making a state deadline to levy the excise tax in January, officials from Augusta, Hephzibah and Blythe will have little but anecdotal information on how much the exemption will cut into the local option sales taxes and special-purpose local option sales taxes paid by local manufacturers.

“We have some that pay some pretty hefty bills for energy,” said Walter Sprouse, the executive director of the Development Authority of Richmond County.

Augusta-Richmond County collects about $80 million to $90 million in those sales tax revenues annually, but it arrives in monthly installments from the Georgia Department of Revenue, which doesn’t break the collections down by source, according to Deputy Finance Director Tim Schroer.

The precise amount that area manufacturers – such as Augusta Newsprint Inc., previously reported in The Augusta Chronicle to be Georgia Power’s largest customer – pay in sales taxes is proprietary information, according to Sue Parr, the president of Augusta Metro Chamber of Commerce.

The chamber and Georgia Chamber of Commerce have worked for years to eliminate the tax, Parr said.

“We’ve had a longstanding position on the elimination of the sales tax on energy,” she said.

Not knowing how much the city stands to lose makes the decision on an excise tax difficult, Augusta Commission member Jerry Brigham said.

“If I’m going to lose significant revenue, I need to replace it with something else,” Brigham said. “Our budget is too tight.”

Sanford Loyd, an accountant and the president of the chamber’s advocacy committee, said the chambers opposed allowing municipalities to levy a replacement tax.

“The advocacy position still is not to implement an excise tax,” he said. “It kind of defeats the purpose of allowing the exemption.”

Loyd said concerned local governments could calculate the amounts lost to the exemption.

“If it has to be calculated (as it is by industries subject to the tax and energy providers who collect it) it should also be true that it’s something they can calculate,” he said. “They don’t know because they don’t put the effort into finding out.”

Shaun Adams, the associate legislative director for Association County Commissioners of Georgia, which is advising county governments on how to follow House Bill 386, said the group’s advice is to levy the excise tax, which can’t exceed the amount of local option and special purpose local option sales taxes in effect, in order to recover the amount lost.

“The only way really to determine how much revenue they would be losing would be to levy the new tax,” Adams said.

Officials will meet to discuss tax options at 4 p.m. today at Augusta-Richmond County Municipal Building. The meeting precedes a 4:45 p.m. legal meeting of the Augusta Commission and a 5 p.m. commission meeting. Items up for discussion at 5 include:

• Approval of a path forward for a resident buyout and relocation from Hyde Park and Wilkerson Gardens neighborhoods, set to become a retention pond when funding becomes available.

• A presentation by Dianne McNabb, of McNabb Consulting, on the reissue of about $90 million in water and sewer revenue bonds and financing options to complete $31 million in municipal building renovations.

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