Braselton is following one of its county’s plans to potentially impose a new energy excise tax on manufacturers — a move that could offset some anticipated revenue drop in local sales tax.
By the end of this year, elected officials in cities and counties across Georgia must decide if they will collect a new, optional excise tax on energy from manufacturers. The move comes after Gov. Nathan Deal signed a new state law in April that exempts manufacturers from paying state and local sales tax for energy.
While the measure was intended to encourage economic development, governments across Georgia are now discussing how they’ll address the dip in sales tax revenue from the tax break. The new state law gives city and counties the option to impose an excise tax to recoup some of that lost revenue.
“Those are revenues that the county has been obviously anticipating collecting and has done their projects based on full collection,” town manager Jennifer Dees told the Braselton Town Council on Thursday.
But the big question mark in the revamped sales tax law is how much it will affect local governments.
“No one knows how much it is, however,” Dees said. “The (Georgia) Department of Revenue cannot tell us how much it is. The energy companies can’t tell us how much it is. All that anyone really knows is that it’s dwindling revenue and they don’t know how much it is and they’ve got to decide if they can lose any.”
With the new state law, the energy exemption on sales tax will be phased in over a four-year period until fully implemented in 2016. Likewise, the excise tax imposed by local governments will follow the phase-in process.
Even if with the excise tax, manufacturers would still be paying less in energy cost because the state’s sales tax rate is four percent. Depending on how they currently impose sales taxes, counties and cities can have an energy tax rate of up to two percent.
Those communities with just one form of sales tax — such as SPLOST (Special Purpose Local Option Sales Tax) or LOST (Local Option Sales Tax) — can get one percent in energy excise tax. Those communities with two sales tax programs — such as SPLOST and LOST — may get up to two percent. The excise tax doesn’t apply to Education SPLOST, according to Dees.
For now, counties across Georgia are considering if they will impose the new tax on manufacturers.
Counties have until Dec. 31 to impose the energy excise tax, although they have the option of implementing anytime after that. Those counties that adopt the new tax before Dec. 31 must have an intergovernmental agreement with the cities in their county to collect revenue. Those cities located in counties that choose not to collect the excise tax by Dec. 31 have the option to implement the new tax on manufacturers within their city limits.
As a town located in four counties — Jackson, Barrow, Gwinnett and Hall — Braselton may potentially have to adopt several intergovernmental agreements.
Excise tax revenue will be based on existing distributions among counties and cities for SPLOST and LOST. Money from the excise tax may be used in a government’s general fund budget — not just capital projects, as SPLOST requires.
On Monday, the Braselton Town Council approved an intergovernmental agreement with Hall County for the new energy excise tax.
Gwinnett County is moving forward with the excise tax and will meet with city officials to discuss the proposal, according to Dees. Barrow County is also getting intergovernmental agreements with its cities.
However, Jackson County officials have opted to not collect the excise tax at this time until they know how much revenue the county will lose, Dees said.
Braselton would then have the option to collect the excise tax from manufacturers that are located in the Jackson County portion of the town, she explained. In that case, the town has about three such manufacturers.
In other business, the Braselton Town Council:
•met in a closed-door meeting for an hour and 15 minutes on Monday to discuss land acquisition. When the meeting was opened to the public, the council voted to authorize the town manager and town attorney to acquire the property discussed in executive session by “any means necessary.”
•approved its Capital Improvement Element (CIE) and Short Term Work Program (STWP) updates to the town’s comprehensive plan. The CIE is required because the town collects impact fees on new developments. The projects in the CIE and the STWP are mostly all projects that are in the works or have been discussed by the council. The only changes to the documents was the removal of projects that have been completed. The town council agreed to transmit the CIE and STWP to the Northeast Georgia Regional Commission.