COVINGTON -- County and municipal governments are under a deadline to decide whether to levy a local excise tax on energy, if they want to recoup losses from a sales tax exemption that goes into effect Jan. 1.
Local county and city officials were scheduled to meet this afternoon to discuss whether the tax should be levied in Newton. The county does not have good information on how the loss of revenues from the energy sales tax will impact local coffers.
"There's no definitive information available from the Department of Revenue on the impact to counties," County Manager John Middleton told the board at its Sept. 4 meeting. While the decision was made to give the state an economic development edge, "it would be nice to have some numbers to understand what we're working with," he said.
Middleton added, however, that the impact should be negligible, because estimates on revenue collections were conservative with anticipation of the tax reform.
The General Assembly enacted a tax reform package earlier this year that included a sales and use tax exemption for energy used in the manufacturing process. The exemption has a four-year phase-in at a 25 percent rate, with full phase-in by 2016.
It also gave local governments the authority to levy a new local excise tax to recoup revenues lost due to the exemption. The tax would be collected by the county from companies that sell energy to manufacturers with the county, according to Association County Commissioners of Georgia. Counties should decide before Jan. 1 if the excise tax will be implemented locally and if cities will participate, according to ACCG . If cities participate, they will receive a share of the tax. City participation would require an intergovernmental agreement with the county. Cities that do not participate will not get a share of proceeds, even though the tax will be implemented countywide, according to ACCG. Counties can opt in at any time, but to ensure recouping of revenues lost due to the exemption, should levy the tax by the end of the year.
If the county decides to levy the tax it would be responsible for collecting the tax and distributing to participating cities their share of revenue. Revenues can be used in the general fund for any purpose.
The county was required to notify cities of a meeting to discuss the proposed excise tax by Sept. 1 and to meet at least 10 days after the notice was delivered and at least 30 days prior to adoption of an ordinance.
The Georgia Chamber of Commerce supported the legislation, stating that Georgia is the only state in the Southeast and one of only 10 in the nation that imposes a sales tax on energy used by manufacturers. Tennessee, South Carolina, North Carolina and Alabama have all passed legislation to phase out the tax "giving our neighboring states a clear competitive advantage in attracting new manufacturing business while making Georgia vulnerable to losing manufacturers" according to a statement from the Georgia Chamber of Commerce.