Local Sales Taxes on Energy Used in Manufacturing Being Eliminated
Press release from the issuing company
Tuesday, September 11th, 2012
Due to the passage of House Bill 386, the state and local sales and use taxes on energy used in manufacturing will be phased out over a 4-year period, beginning January 1, 2013.
The legislation established a process aimed towards making the impact of this removal of the local sales tax revenue neutral for city and county governments, provided that these governments adopt a local excise tax on energy used in manufacturing at the same rates.
What your city needs to know
A county or a city may elect, by ordinance, to phase-in a max 2% excise tax to replace the sales tax on energy used in manufacturing over the same 4-year period. The rate of the phase-in would mirror the schedule of the phase-out of the sales tax (25% per year).
If a municipality has not received written notice from the county requesting a meeting to enter into an intergovernmental agreement by September 1, the municipality may enact the excise tax by ordinance or contact the county to enter into an intergovernmental agreement to levy it county-wide.
If the county elects not to notify the city or enter into an intergovernmental agreement, then the municipalities are authorized to levy an excise tax within the corporate limits of the municipality by passing an ordinance in the city. The county will not receive any proceeds from the municipal excise tax.
If a county decides to levy the excise tax and the municipality decides not to enter into an intergovernmental agreement for the county-wide excise tax, the tax will still be collected countywide, including in the city limits, and the municipality will not receive any proceeds.
If a municipality later decides to participate with the county after the tax is enacted, they must notify the county and within 60 days amend the intergovernmental agreement. The municipality will then receive revenue from the excise tax, starting 12 months after the amended intergovernmental agreement is finalized.
A city needs to participate because it will receive revenue from the excise tax based on the percentage share from LOST and SPLOST. The excise tax is meant to replace the sales tax that will be lost, so even if a city does not have manufacturing within its boundaries it still shares in the sales tax on energy used in manufacturing.
If the county enacts the excise tax and my city does not participate what happens?
You will be giving away revenue to the county and the other municipalities within the county who do choose to participate. The manufactures within your city limits will be charged the excise tax and the revenue generated will be shared with the county and all of the other cities that are a part of the intergovernmental agreement.
How much revenue is at stake?
This is impossible to calculate since DOR does not collect sales tax data from point of sale, and the energy providers will not release information due to privacy concerns for their customers. The only way to determine the amount of revenue that is at stake is to enact the excise tax for the first year and then determine the amount based on what the revenues you receive from the energy providers.
If my city enacts the excise tax without the county will I have to share the revenue with the county and other cities?
No, if a city enacts the excise tax without the county it keeps 100% of all the revenue that is generated within its municipal borders.
If we enter into an intergovernmental agreement with the county are the distribution amounts negotiated?
No. The revenue from the excise tax will be distributed on the same percentages as your local tax distributions. (LOST, SPLOST, HOST, MOST).
The legislation established a process aimed towards making the impact of this removal of the local sales tax revenue neutral for city and county governments, provided that these governments adopt a local excise tax on energy used in manufacturing at the same rates.
What your city needs to know
A county or a city may elect, by ordinance, to phase-in a max 2% excise tax to replace the sales tax on energy used in manufacturing over the same 4-year period. The rate of the phase-in would mirror the schedule of the phase-out of the sales tax (25% per year).
If a municipality has not received written notice from the county requesting a meeting to enter into an intergovernmental agreement by September 1, the municipality may enact the excise tax by ordinance or contact the county to enter into an intergovernmental agreement to levy it county-wide.
If the county elects not to notify the city or enter into an intergovernmental agreement, then the municipalities are authorized to levy an excise tax within the corporate limits of the municipality by passing an ordinance in the city. The county will not receive any proceeds from the municipal excise tax.
If a county decides to levy the excise tax and the municipality decides not to enter into an intergovernmental agreement for the county-wide excise tax, the tax will still be collected countywide, including in the city limits, and the municipality will not receive any proceeds.
If a municipality later decides to participate with the county after the tax is enacted, they must notify the county and within 60 days amend the intergovernmental agreement. The municipality will then receive revenue from the excise tax, starting 12 months after the amended intergovernmental agreement is finalized.
FAQs
We do not have manufacturing in our city, why would we participate with the county’s excise tax?A city needs to participate because it will receive revenue from the excise tax based on the percentage share from LOST and SPLOST. The excise tax is meant to replace the sales tax that will be lost, so even if a city does not have manufacturing within its boundaries it still shares in the sales tax on energy used in manufacturing.
If the county enacts the excise tax and my city does not participate what happens?
You will be giving away revenue to the county and the other municipalities within the county who do choose to participate. The manufactures within your city limits will be charged the excise tax and the revenue generated will be shared with the county and all of the other cities that are a part of the intergovernmental agreement.
How much revenue is at stake?
This is impossible to calculate since DOR does not collect sales tax data from point of sale, and the energy providers will not release information due to privacy concerns for their customers. The only way to determine the amount of revenue that is at stake is to enact the excise tax for the first year and then determine the amount based on what the revenues you receive from the energy providers.
If my city enacts the excise tax without the county will I have to share the revenue with the county and other cities?
No, if a city enacts the excise tax without the county it keeps 100% of all the revenue that is generated within its municipal borders.
If we enter into an intergovernmental agreement with the county are the distribution amounts negotiated?
No. The revenue from the excise tax will be distributed on the same percentages as your local tax distributions. (LOST, SPLOST, HOST, MOST).
Please contact Mark Baggett at (678) 686-6287 or [email protected] if you have any questions or comments.
