I heard a buzz toward the end of 2011 and more frequently in 2012 that there is a need for the General Assembly to eliminate the sales tax on energy used for manufacturing (some organizations such as the Georgia Chamber of Commerce are also asking to broaden that to include elimination of sales tax on energy used in mining and agriculture).
The goal is to promote economic development, and many who have studied the issue opine that elimination of the sales tax will reduce the cost to produce goods which in turn could create a competitive edge for Georgia manufacturers.
The buzz about the elimination of this tax is probably heard down here in South Georgia even more and with good reason. Our region has some very strong industries down here and leaders in our region desire to attract new industry to replace some we have also lost, and, at the same time, encourage the strong ones to remain with us.
While some have stated this past fall that this idea is a new one, it is not really. Many were promoting this when I was still a member of the General Assembly, which now was a little over three years ago. The idea also was placed into a bill last year and is currently pending before the House of Representatives.
House Bill 86 was written by Rep. Roger Williams, R-Dalton and co-sponsored by Rep. Ed Rynders, R-Leesburg, Rep. Tom Dickson, R-Cohutta, Rep. Allen Peake, R-Macon, Rep. Don Parsons, R-Marietta and others. It would broaden the exemptions for sale or use of energy already existing in title 48 of our Revenue Code.
The first thing the bill does is strike out restrictions on the current exemptions for energy use in manufacturing. One restriction currently under the law is that it does not apply to any local sales and use tax imposed. Another example is that it does not apply to the first $7.60 per decatherm of the sales price of natural or artificial gas (I know all of you know what a decatherm is, right?).
Those restrictions would be struck by the legislation pending.
The pending legislation broadens the current exemptions and also makes it a little easier to understand what is meant by energy used in the manufacturing process (I do not see decatherms mentioned anywhere).
The elimination of the tax, of course, will produce a hole in the budget. Alan Essig of the Georgia Budget and Policy Institute estimates that the cost will be approximately $140 million.
Alan is very knowledgeable having worked in the Appropriations Committees of the House and the Senate when I was under the Dome. He also served as assistant commissioner for the Georgia Department of Human resources. In the long run, many contend the loss sustained in the budget will be overwhelmingly overcome by the gains in attracting and retaining industry in our state. We certainly need that.
Watch this bill. You can follow it at: http://www.legis.ga.gov/legislation/en-US/Display/20112012/HB/86
Michael Meyer von Bremen is an Albany attorney and partner with Hall, Booth, Smith & Slover. A former state senator, he represented the 12th Senate District, which includes Albany, for a decade. He writes a column periodically during the legislative session on issues facing the General Assembly.