House Bill 419 by Rep. Barry Fleming, R-Harlem, would repeal part of a 2008 law that exempted manufacturers from the sales tax on machinery they purchased for use in their production.
A separate law passed in 2010 removes the sales tax on electricity they use in their factories if power is more than half of their production costs. Fleming wouldn’t change that law.
He said the purpose of the 2008 law was to make Georgia more attractive for companies to locate their factories here – and the jobs that go with them. It also sought to keep manufacturers from leaving for cheaper states.
“I don’t think Georgia Power is going to be building plants in Connecticut,” he said. “… I don’t think the (original law) intended to extend it to industries that we don’t have to worry about leaving.”
He doesn’t have an estimate of how much money his bill would bring into the state and local governments. However, it would be a boost to his home region which just began collecting an additional sales tax for the benefit of transportation projects there.
Fleming said he introduced the bill as part of his campaign pledge to eliminate the state’s income tax. Since the income tax produces roughly half of the revenue needed to operate state government, eliminating it is only possible if the state limits its sales-tax exemptions.
Georgia Power opposes the bill.
“We believe that machinery and equipment used in power generation should continue to be considered manufacturing equipment and therefore exempt from state sales and use taxes, as they are under current law,” said company spokesman Mark Williams.
Fleming also introduced HB 418 at the same time. It authorizes the Department of Revenue to disclose to local officials confidential information from tax returns filed by major companies operating in their area.
When city and county officials have questions about why sales-tax collections dip or rise, they can’t get specific information about what giant retailers collect because of laws safeguarding the confidentiality of tax returns. But without the information, the local governments can’t tell if the checks they get from the Revenue Department are correct.
“All the confidentiality incumbent on the state government would be incumbent on the local government,” Fleming said.
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