Gasoline Tax Exemption in Georgia May Have Marginal, But Real Benefits

Gas prices are up everywhere — but less so in Georgia, after the state legislature suspended the gas tax.

The legislation was signed into law by Governor Brian Kemp on March 18, and then because it was due to expire on May 31, Kemp extended it until July 14. The measure does not cover federal taxes.

Martin Parker, a lecturer in the Department of Management at the University of Georgia and a TechCXO partner, thinks the gas tax exemption was the right move for the state when considering a surge in the inflation.

Previous cover:Kemp signs temporary gas tax suspension

“We have to haul all of this stuff. We have fuel costs in there. We have our own personal fuel costs. I like this one,” he said of the policy.

According to the Associated Press, the federal tax is 18.4 cents per gallon and the state tax is 29.1 cents per gallon, not including local or municipal taxes. This state tax also helps local governments, with 10% per year allocated to cities and counties. According to Ministry of Revenue releases, this tax brought in about $150 million a month in the first three months of this year, even though the tax was removed in mid-March.

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Assuming the rate remains stable, the four months of the gas tax suspension could cost the state $600 million in revenue, which could come from the state’s $1.25 billion surplus. dollars to cover any shortfall in transportation funding.

The Georgia Chamber of Commerce endorsed the suspension, saying it would help small businesses in particular.

“With nearly half of Georgia’s workforce employed by small business and small businesses themselves accounting for almost 99% of employers in the state, the suspension of the fuel tax is a critically important,” Chris Clark, president of the Georgia Chamber of Commerce, said in a press release.

A spokesperson for the Georgia Budget & Policy Institute, a liberal body, said his organization had not conducted any analysis on the Georgia tax suspension, but pointed to the Institute’s analysis on tax and policy. economic which examined the impact of a suspension of 18.4. cent per gallon federal tax.

The ITEP estimated that suspending the federal tax would save drivers an average of less than $8 a month, which they said would not be worth the loss of infrastructure revenue. Georgia’s tax suspension would save drivers an average of about $12.50 per month by this estimate.

Parker thinks both things are true. He estimates the savings at around $15 to $20 per month for Georgians, but thinks the savings could be higher for small businesses. He pointed to his brother-in-law’s street-sweeping business in Pittsburgh, where fuel costs are a major expense.

“Gasoline prices are on billboards, you know, that we drive by, so we’re very, very sensitive to that, and so if we see it go down by these tax holidays essence, it has a marginal positive impact,” Parker said.

Overall, Parker considers the benefit to be small. He thinks the absolute best-case scenario is that, with fuel costs baked into so many products, Georgians could save $2 for every $1 in lost revenue. Even so, the lower gas prices are worth the lost revenue, he thinks.

“Governor Kemp gave $500 back to the tax cut, he gave substantial salary increases to teachers…and he didn’t have a substantial negative impact on Georgia’s budget,” said Parker. “Just as it’s marginal for the individual, I think it’s also marginal for the state.”