JONESBORO — Many of Clayton County’s cities are ready to move forward on creating an energy excise tax on manufacturing businesses, to replace an outgoing manufacturing energy sales tax, but they are still waiting to see what the county commission will do.
Gov. Nathan Deal signed House Bill 386, which created an energy tax exemption, into law in April. Under the law, “the sale, use, storage or consumption of energy which is necessary and integral to the manufacture of tangible personal property” is exempt from almost all state and local sales and use taxes. The only exception is sales taxes used to fund education projects, according to the law.
However, that created a tax revenue vacuum which county and city officials will now have to decide whether to fill by creating a new energy excise tax. County and city officials met Tuesday to discuss the proposed tax.
“We would go along in concert with the county, if the county opts in,” Lake City Mayor Willie Oswalt told commissioners. “You can’t afford to opt out.”
Representatives from Jonesboro, Lovejoy and College Park joined Oswalt in expressing interest from their respective cities to opt in to the excise tax, if the commissioners would give some indication of where they stand on the issue.
That is where things got complicated. Commission Chairman Eldrin Bell called for an informal straw poll to see where commissioners who were in attendance stood on the tax issue because they can’t vote on it, by law, for another 30 days.
Bell said he would opt in, while Commissioner Michael Edmondson said he would opt out because the county could lose manufacturing businesses to neighboring counties if Clayton implemented the tax and, for example, Henry County decided to reject it.
Commissioner Sonna Singleton then declined to say whether she would opt in or out, because Commissioners Wole Ralph and Gail Hambrick were not at the meeting.
“I’m just going to wait on it,” Singleton said. “We do have two other commissioners who are not present but will still be voting on this.”
The energy sales tax exemption is being phased in over a four-year period, so manufacturers will be exempt from 25 percent of energy sales taxes in 2013, 50 percent in 2014, 75 percent in 2015 and eventually 100 percent beginning in 2016.
The Georgia Municipal Association’s web site states the excise tax will be on energy used in manufacturing.
The Association of County Commissioners of Georgia has published an information sheet on its website to explain the excise tax to county commissions. The group states the excise tax provision was included in the law to give counties and cities a way to recoup any money lost because of the energy sales tax exemption.
An intergovernmental agreement will be required to collect and share the tax proceeds, however, according the statewide commissioners group.
“This is essentially a county tax,” the information sheet states. “There must be a meet-and-confer with the cities. If a city declines to participate, it will be collected countywide but the city gets no proceeds.”
Cities who participate in the excise tax will receive the same percentage share they receive for SPLOSTs and LOSTs, according to the ACCG. The group’s website states the excise tax, which will be capped at 2 percent, must be phased in over a four-year period to match the phase out of the sales tax.
Counties and cities have until Dec. 31, to decide whether to create an energy excise tax.
On the Web:
Georgia General Assembly: http://www.legis.ga.gov/
Georgia Municipal Association: http://www.gmanet.com
Association of County Commissioners of Georgia: http: www.accg.org/