In the
aftermath of a joint legislative study committee report on transportation, Georgia lawmakers have spent the last month figuring out
how to extract more money from taxpayers to pay for transportation projects.
The report called for at least $1-1.5 billion in additional spending annually.
To address “the full universe of transportation needs, including establishment
of passenger rail systems,” the report claimed the state would need between
$3.9 and $5.4 billion annually, constituting a 20 percent increase in the total
state budget.
Georgia House Bill 170,
which is supported by Republican Gov. Nathan Deal and House Speaker David
Ralston, would raise at least $1 billion per year by making a number of changes
to the state gas tax. Gasoline in Georgia is subjected to an excise tax of 7.5
cents per gallon, a 4% sales tax and in most places another local sales tax of
3%-4%. Under H.B. 170, this mix of taxes would be converted to a 29.2 cents per
gallon tax, indexed to inflation. This
is a tax increase that rises year by year.
As Tom Crawford with the Gainesville Times noted, “the current mix of excise and sales taxes on gasoline
totals roughly 27 cents per gallon.” By indexing the gas tax to inflation and
increasing the tax by more than 2 cents per gallon, H.B. 170 is clearly a tax
increase.
Drivers of
hybrids aren’t forgotten. The bill imposes a car tax hike on alternative fuel
vehicles of between $200-$300 per year, indexed to inflation. Virginia’s 2013
transportation tax hike did this as well until Democrat Governor Terry
McAuliffe repealed the tax less than 6 months later.
H.B. 170 also
engages in an inventive gimmick to generate $500 million in new revenue. By
immediately absorbing local gasoline sales tax revenue, the state will now
collect and spend money otherwise collected and spent by localities. Most
localities spend this money on a bevy of non-transportation needs, like
education. Absent the willpower to cut spending though, it is likely local
governments will consider tax hikes in the future.
Upon the
expiration of local sales taxes on gasoline, H.B. 170 permits localities to
raise the local excise tax on gasoline by up to 3 cents per gallon before
requiring that further gas tax hikes be approved by referendum for a maximum of
6 cents per gallon in local taxes. This sets in motion future tax hikes, not
all of which even need voter approval.
While we take
no position on the state absorbing local tax revenue streams, directing gas tax
revenue to transportation projects instead of unrelated spending programs like
education, should be applauded. In 2014, by a 80-20 margin Wisconsin voters passed a ballot initiative
requiring gas tax revenue be spent on transportation. Consumers' expectations on gas tax revenue are clear:
spend it on transportation and nothing else. Unfortunately, the definition of
"transportation" is broad and encompasses a number of expensive
projects, all of which may not actually alleviate traffic to improve anyone's
commute to work.
So what would
the total gas tax bite be if H.B. 170 passed in Georgia?
|
Tax
Collector
|
Present
Law
|
H.B. 170
|
Future
|
Total
Tax Possible
|
|
Federal
|
18.4 cents/gallon
|
NA
|
NA
|
18.4 cents/gallon
|
|
State
|
7.2 cents/gallon + 4% sales tax
|
29.2 cents/gallon
|
Chained to CPI
|
*29.2 cents/gallon
|
|
Local
|
3%-4% sales tax
|
Up to 3 cents/gallon
|
Up to 6 cents/gallon
|
6 cents/gallon
|
|
|
45.4 cents/gallon
|
|
|
*53.6
cents/gallon
|
*Chaining the tax to inflation guarantees additional
increases.
Americans
for Tax Reform opposes H.B. 170.
Not only does the bill result in an immediate gas tax hike, it gives local
governments free rein to raise local gas taxes in the future. The total tax on gasoline in Georgia could
range as high as 53.6 cents per gallon, well above the U.S. average of 48.29
cents per gallon. If implemented, H.B. 170 could make gasoline sold in
Georgia, the 9th highest taxed gasoline in the nation. Indexing the gas tax to
inflation would make it worse.
ATR urges
the legislature to revisit its transportation spending priorities and reject
all gas tax hikes on consumers.
http://www.atr.org/atr-opposes-house-bill-170s-massive-gas-tax-increase-georgia
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