Procter & Gamble’s Albany plant is, by some estimates, the second-largest consumer of energy in the state of Georgia.
ALBANY -- In a time when states are looking at every competitive advantage to lure industry and create jobs, Georgia continues to grapple with a tax that threatens both new and existing industry while it adds millions to the states coffers each year.
Georgia currently is one of only 10 states in the country that charge an unabated sales tax on energy consumption.
The state percentage is roughly 4 percent with a local share varying across the state, but that percentage is literally driving up costs to industry -- the same industries that provide jobs and a way of life for millions of Georgians.
Vince Falcione, chairman of the Georgia Industrial Group and a spokesman for Albany's Procter & Gamble plant, said the tax is hindering opportunities for growth that Georgia's neighboring states, who don't have an energy sales tax or who at least have certain exemptions in place, are enjoying.
"As chairman of the Georgia Industrial Group, we have been very active in trying to get this tax eliminated," Falcione said. " Manufacturing employment is rebounding in many other states at a faster rate than in Georgia. Members of the GIG have lost production to a sister plant (site within their own company who produces the same products) because it is more expensive to produce their product in Georgia.
"Taxing energy used in manufacturing puts Georgia manufacturers at a competitive disadvantage. This not only impacts the existing jobs we already have in Georgia but impacts Georgia attracting new jobs to the state.
Falcione says that the state should be doing everything it can to eliminate the hurdles for growth in the manufacturing sector. One way would be to repeal the tax.
"Georgia has approximately 350,000 manufacturing jobs. We need to be doing every thing we can to grow that number. How can we afford not to eliminate this tax?"
At P&G's Albany plant alone, which some estimate to be the second-largest consumer of energy in the state, the tax adds hundreds of thousands of dollars each year to the company's overhead costs at a time when corporations around the country are scrutinizing every penny spent.
The move to repeal the energy tax has gained traction over the years.
Last year, some legislators introduced House Bill 86, which would have effectively repealed the tax, but the bill didn't survive the session.
Now, many statewide organizations such as the GIG and Georgia's Public Service Commission are asking legislators under the Gold Dome to repeal the tax.
In a letter to the General Assembly, the PSC urged legislators to end the tax that they said helps create an unfriendly business environment that hinders job growth and has resulted in the loss of more than $1 billion in private industrial investment in the state to states without an energy tax.
"With an unemployment rate that is among the highest of any state in the country, providing a business environment within Georgia that secures existing jobs and creates new jobs for Georgians should be among the highest priorities of the governor and General Assembly," the letter states.
"Manufacturing employment is rebounding in many other states at a faster rate than in Georgia. The principal reason, according to manufacturers across the state, is that it is more expensive to produce their products in Georgia than elsewhere, especially in the Southeast. Georgia remains non-competitive with its neighboring states, and nearly all states, by taxing energy used in manufacturing....Because energy is second only to labor, and in some cases exceeds the cost of labor as a cost of production, this added tax burden is significant. Because energy cost is such a large component of manufacturing, it heavily influences decisions regarding investment in new technology, plant expansions, labor force curtailments, and workforce realignments. This is particularly true for companies with manufacturing operations in multiple states."
In a recent roundtable meeting with the Georgia Press Association, state Sen. John Bulloch, R-Ochlocknee, said the elimination of the energy tax was going to be one of the Southwest Georgia delegation's priorities for the 2012 session.
Marshall Guest, a spokesman for state House Speaker David Ralston, views elimination of the tax of energy as a vital part of overall tax reform.
"Eliminating the sales tax on energy for manufacturing enjoyed wide support among House leadership and was a key element of the tax reform proposal that was under consideration by the legislature this past regular session. Tax reform will again be at the forefront in the upcoming session, and in turn, so will this proposal," Guest wrote.
But chances are, repealing the tax in its entirety won't be an easy sell in the 2012 session of the General Assembly.
If the tax goes away, it'll mean the loss of millions in revenues from the state's coffers at a time when the state is still feeling the effects of the economic recession. The general feeling stated by state officials is that Georgia won't see a "normal" budget year until Fiscal year 2014.
One compromise that could be considered is to model a plan after states that offer exemptions or reduced rates for energy taxes. Tennessee and North Carolina are among a handful states that take the approach of levying reduced energy tax rates for manufacturers.