GA Constitution on Gas Taxes

I asked a good friend that is very familiar with the Georgia Constitution in regard to the gas tax about what the Constitution says about the gas tax and this was his interpretation. He makes good points.

Motor Fuel Taxes and Constitutional Dedication, a Short Course on My Recent Discoveries

I have postponed this too long, years in fact, but offer the excuse that I never knew much of it until the last week or so, and am still sorting thru the implications.

The Constitutional dedication of motor fuel taxes is written with much more precision that an initial reading, actually dozens of readings, will reveal: “An amount equal to all money derived from motor fuel taxes received by the state in each of the immediately preceding years, less (a list follows,) …is hereby appropriated for the fiscal year beginning on July 1, of each year following, for all activities incident to providing and maintaining an adequate system of public roads and bridges in this state, …et.seq.”

Note my underlined clause above. This is a two-part test: “money derived from motor fuel taxes” is the first part, and the second is “received by the state.” Money derived from motor fuel taxes means only the excise tax receipts on motor fuel, as the excise tax is the only tax on thing, motor fuel, itself.

Sales taxes levied on transactions for motor fuel are taxes on those exchanges of money for fuel, and are called sales taxes for that reason. Only the excise tax is an impost on motor fuel itself, and it is measured in an amount of money for a particular volume of the product, motor fuel. This interpretation is supported by the name and test of the law called “The Second Motor Fuel Tax,” which is a current impost of 3% of the sales tax on motor fuel that was “dedicated” by that statutory language during the Carter administration.

“The Second Motor Fuel Tax” statute only pretends that the revenue on the sales tax on motor fuel is a “motor fuel tax,” and is thereby dedicated to the “adequate system of public roads and bridges.” Before this “dedication,” this money, as a sales tax collected since the early 1950’s, went to the general fund.

The second part of the test is the phrase, “received by the state,” means that only those motor fuel taxes that finally wind up in the state treasury are dedicated. This is why local sales tax receipts on sales of motor fuel beyond the 3% “second motor fuel tax” are not dedicated.

It is not why the 4th%, called the “general sales tax on motor fuel” in law, is not dedicated: that one is not dedicated for the same reason that the 3% was not dedicated until the Carter administration, because the legislature, in its collective wisdom knew very well that a tax on the sale of motor fuel was not a motor fuel tax. That is why they went to such trouble to call the 3% tax on the sale of motor fuel “the second motor fuel tax:” because it certainly was not that at all.

This brings forth the interesting question that is raised by HB 170 and its conversion of the revenue generated by “the second motor fuel tax” and “the general sales tax on motor fuel” into excise taxes. At the same time the bill removes local sales taxes on the sales of motor fuel, and also converts those receipts into excise taxes. There is little doubt that such a conversion is perfectly legal, and also that such a conversion increases the sum that is dedicated by the Constitutional directive, since the excise taxes levied and received by the state are plainly subject to dedication. The trickery of “the second motor fuel tax” is discarded in favor of a legitimate dedication of funds.

HB 170 goes on to allow the creation and impost of additional local motor fuel taxes, excise taxes that differ from the state’s receipts of excise taxes on motor fuel by not being “received by the state.” These receipts would be “received” by the localities that levy them and therefore are not dedicated. HB 170 goes on to make a “statutory dedication,” but such an exercise is nugatory—the Constitution specifically prohibits dedication, except in the text of the fundamental document itself, as in the very case discussed here, the motor fuel tax.

This means that the local excise taxes on motor fuel allowed by HB 170 may be appropriated to any legal purpose by their recipient local governments.

I think that the above argument is correct, but I am not so confident of that as to assure anyone of that. I hope readers find it helpful. It has taken me since 1989 to puzzle through these arrangements.

Source: Debbie Dooley, Tea Party Patriots Leader posted on New Republican Leadership for Principles above Politicians