The 2 percent energy excise tax – which the county commission is scheduled to approve – would replace local tax revenues lost from a state-enacted tax break.
House Bill 386, a tax reform bill signed into law last year, phases out the sales tax that Georgia charges on energy used in manufacturing. The law eventually will reduce state revenue by as much as $177.6 million, according to an analysis by the Georgia Budget and Policy Institute.
“Georgia is the only state in the Southeast and one of 10 in the nation that levies a sales tax on energy used in manufacturing,” the institute reports.
Designed to boost Georgia’s competitiveness in attracting manufacturers, the exemption leaves in place the education sales tax that goes to local school systems but phases out all other sales taxes on energy for factories.
That’s a total of 6 percent in counties such as Columbia, which, in addition to the 4 percent state sales tax, charge 2 percent from two local sales taxes.
Counties weren’t consulted on the exemption, commissioners have complained, and in Columbia County’s case stood to lose as much as $250,000 in local revenue from the exemption, County Administrator Scott Johnson said.
The law allows counties to replace their 2 percent portion of the tax by imposing a local excise tax on energy, and the second reading of Columbia County’s ordinance today will put that tax into effect, commission Chairman Ron Cross said.
Columbia County will join at least 43 other Georgia counties in imposing the tax, said Beth Brown, a spokeswoman for the Association County Commissioners of Georgia. Augusta-Richmond County has not imposed the tax.
Representatives of some of Columbia County’s larger manufacturers – John Deere and Georgia Iron Works – spoke to the commission in December to oppose the excise tax, but since have said “they understood the reluctance of the county (to accept the cut) since we were not consulted on it,” Cross said.
Manufacturers in the county still will be on track to receive a 4 percent cut from the state’s portion of the tax, lowering their overall tax rate from 7 percent to 3 percent. The transportation sales tax isn’t charged to energy use, Johnson said.
One difference in the two taxes is that the sales tax is collected by the state and remitted to the counties, a process in which local officials have long complained they aren’t able to see who is paying or verify that they’re getting the correct amount.
The energy excise tax, however, will be collected by local utilities and go directly to the county’s general fund. The county will be able to see where the money comes from.
“The utility collects the tax and gets it to the county,” Cross said. “You’re able to go back and look at the end of the year as to what amount (of energy) they used to make sure it’s correct.”