Governor Suspends Scheduled Increase in Gas Tax

Today Governor Sonny Perdue signed an executive order suspending a scheduled increase in gas taxes that would have taken effect on July 1.

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

Legislation passed in 2004 requires the Department of Revenue to use recent gas prices to recalculate the state motor fuel and state sales taxes on fuels every six months. That percentage-based tax is converted to a per gallon rate which is readjusted every January 1 and July 1. Record gas prices at the pump over the past 6 months meant Georgians would have faced higher gas sales taxes at the pump.

Without today’s action, the state motor fuel and state sales taxes on gasoline would have risen on July 1 by 2.9 cents per gallon to 13.9 cents, a 26 percent increase. Governor Perdue’s order will hold the tax at 11 cents per gallon, which is combined with an excise tax of 7.5 cents per gallon.

The 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. Taxes on diesel were set to rise 4.2 cents a gallon to 16.5 cents and taxes on aviation gasoline 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 suspension does not freeze or apply to any local sales and use taxes.

Pursuant to state law, the tax will remain frozen until the Georgia General Assembly meets again. The legislature has adjourned its regular 2008 session, which means the next meeting of the General Assembly is expected to be in January 2009.

Today’s action follows last month’s suspension of the state sales tax on off-road diesel used by farmers and timber owners, as well as off-road diesel used for mining and construction purposes.

The Governor’s Executive Order is below:

Whereas: Motor fuels and aviation gasoline are essential commodities used by Georgians for transportation; and

Whereas: The price of gasoline has increased dramatically since the adjournment of the 2008 General Assembly, namely rising in price by approximately ten percent from one month ago, and almost twenty-four percent since last year at this time; and

Whereas: The increases in the cost of gasoline and other motor fuels have and will continue to impose significant financial burdens on all Georgians and Georgia’s businesses; and

Whereas: This inflated cost can prevent Georgians from spending on other necessary goods and business expansion; and

Whereas: The significant increase in motor fuel prices will result in a windfall to the State in the form of surplus state taxes on these commodities; and

Whereas: Georgia law authorizes the Governor to suspend the collection of taxes, or any part thereof, due the state until the meeting of the next General Assembly; and

Whereas: Under these circumstances, relief to the taxpayers of Georgia is warranted.

NOW, THEREFORE, PURSUANT TO THE AUTHORITY VESTED IN ME AS GOVERNOR OF THE STATE OF GEORGIA AND BY SECTION 45-12-22 OF THE OFFICIAL CODE OF GEORGIA ANNOTATED, IT IS HEREBY

Ordered: That the collection of any rate of prepaid state taxes as defined in paragraph (5.1) of Section 48-8-2 of the Official Code of Georgia Annotated, to the extent it differs from the rate levied as of January 1, 2008 pursuant to Section 48-9-14 of the Official Code of Georgia Annotated, be suspended as it applies to sales of motor fuel and aviation gasoline as those terms are defined in Section 48-9-2 of the Official Code of Georgia Annotated, until the General Assembly acts upon this Order.

This 2nd day of June, 2008.