By a unanimous vote Jan. 22, commissioners passed an ordinance to allow the county to levy the energy tax to replace local sales tax lost to an energy sales tax exemption for manufacturing enacted by the state.
The Georgia General Assembly passed House Bill 386 in 2012, which authorizes counties to levy a new local excise tax on energy, according to County Administrator Eric Linton.
“This is to maintain the 2 percent county tax on energy used in the manufacturing of tangible goods,” said Linton.
The 2 percent is comprised of 1 percent for Local Option Sales Tax and 1 percent for Special Purpose Local Option Sales Tax.
The state’s 4 percent sales tax will be exempt for manufacturing but the board of education’s 1 percent education SPLOST is not exempt under the law, Linton explained.
Part of the tax reform package enacted by the Legislature was to allow a local excise energy tax on manufacturing, Linton explained, designed to replace revenues lost to counties due to the exemption.
Linton stated during the public hearing that this should not be considered a new tax, but a method of replacing local sales tax revenues.
The amount of revenue from the county energy excise tax would equal county revenues lost due to the new sales tax exemption, he explained.
The exemption applies only to the energy used in manufacturing. It would not apply to the sale of energy used, for example, in heating and air conditioning.
When the legislation was enacted by the state, explained County Attorney Ken Bernard, the counties were not consulted so fiscal impacts to the county cannot be measured.
“When enacted by the state,” said Linton, “there was no way to know the impact on local governments.”
Commission Chairman Tom Worthan said the state’s actions “could impact our revenue as much as $200,000. We are doing this to take the tax burden off our residents.”
The cities of Douglasville and Villa Rica would get the same proportional share they already receive from the two underlying local sales taxes and use taxes, said Linton.
The energy exemption will be phased in at a rate of 25 percent each year, until fully phased in 2016, said the county administrator.