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Relief for consumers? Perdue orders no gas-tax increase

By Johnny Jackson

jjackson@henryherald.com

Locust Grove resident, Reba French, lives close to her work place in Henry County, a largely commuter suburb of Atlanta.

Record-high gas prices, however, are still an increasing concern for French, who is planning to buy her first car since moving to metro Atlanta two years ago from her native state of Pennsylvania.

"I would never get a big car - maybe a Volkswagon, something little and cheap on gas," French said.

Average metro Atlanta gas prices rose Monday to a record $3.98 per gallon for regular unleaded gas - up 91 cents from a year ago. The $3.97 national average recorded on June 1 was also 81 cents more per gallon than consumers paid just three months ago.

On Monday, in an effort to deflect the rising costs of gas from Georgia consumers, Gov. Sonny Perdue signed an executive order to suspend a scheduled increase in Georgia's gas taxes, which would have taken effect on July 1, and would have added 2.9 cents per gallon in taxes.

"Georgians are already facing record gas prices," Perdue said, "and raising taxes even higher would put further strain on families' budgets and on our economy."

Legislation passed in 2004 requires the Department of Revenue to use recent gas prices to recalculate the per-gallon percentage of state motor fuel and state sales taxes on fuels every six months - effective every Jan. 1, and July 1.

Record gas prices so far this year, however, would mean that Georgians would have to pay even more to sales taxes at the pump.

Georgia law, however, authorizes that the governor may suspend state tax collections until the Georgia General Assembly reconvenes in January 2009.

"Suspending these tax increases will benefit some of our most important industries, including agriculture, tourism, aviation and logistics, as well as every Georgian that buys gasoline," said Perdue.

Perdue's order will hold the state's motor fuel and sales taxes at 11 cents per gallon of gas. The taxes would have otherwise risen July 1 to 13.9 cents.

Georgia's current 11-cent tax is combined with an excise tax of 7.5 cents per gallon - a slight amount when compared to some other southern states.

According to AAA Auto Club South, the state collects less than a penny for every two collected in Florida and nearly a cent per every three cents collected in Tennessee.

Those states have experienced similar spikes in average gas prices, though Tennessee has seemed to fair better than Georgia, Florida, and most other states, averaging only $3.82 per gallon of regular unleaded on Monday.

Daily record-setting gas prices across the nation could begin to decline, though, according to Randy Bly, spokesman for AAA Auto Club South.

Bly said if the U.S. Dollar continues to strengthen against the Euro and other foreign currency, consumers could see gas prices stall and go down.

"Last week's report from the U.S. Department of Energy indicated a drop in crude oil and gasoline inventories, though refinery output remained unchanged at a fairly healthy 87.91 percent output," he said.

"However," Bly added, "the report was tempered with news of lower consumer demand due to record high gasoline prices, a strengthening U.S. Dollar and speculators selling-off futures contracts in belief crude oil prices [down to about $127 per barrel on Monday] may continue to fall, thus looking to invest their money elsewhere."

Perdue's executive order this week follows last month's suspension of the state sales tax on off-road diesel used by farmers and timber owners and for mining and construction purposes.

The tax suspension also freezes state motor fuel and state sales taxes on other categories of fuel, including diesel, aviation gasoline, liquid propane gas and "special fuels" which includes compressed natural gas, according to the Governor's Office.

In Georgia, the price of every gallon of gasoline includes 18.5 cents in state taxes, 18.4 cents in federal taxes and a local tax that varies from county to county.

Without Perdue's stay of collections, taxes on diesel were set to rise 4.2 cents a gallon to 16.5 cents, and taxes on aviation fuel would have increased by 3.6 cents per gallon to 20.9 cents. Propane taxes would have risen 0.8 cents a gallon to 8.2 cents, and taxes on compressed natural gas would have increased 2.9 cents per gallon to 13.8 cents.

The tax will remain frozen until the General Assembly meets again in January 2009.