Tools for Implementing the Energy Excise Tax Local Exemption
Click here for answers to the most common questions we have received.
The General Assembly enacted a major tax reform package in 2012 through the passage of HB 386. Among many things addressed in this legislation, was the enactment of a sales and use tax exemption for energy used in the manufacturing process. This exemption applies not only to state sales and use taxes but also to local sales tax levies like SPLOST and LOST so local tax revenues will be impacted.
Note that this exemption applies ONLY to the use of energy in manufacturing as, for example, in producing cars or carpet. It does not apply to the sale of energy for other purposes such as heating and air conditioning.
The energy exemption is subject to a 4-year phase in of 25% per year until fully phased in 2016.
Additionally, HB 386 authorizes, but does not require, counties to levy a new local excise tax on energy. The new authorization was designed to allow counties and cities to recoup the revenues lost to them as a result of the new exemption. The amount of the proceeds from the county energy excise tax, if levied, would equal county revenues lost due to the new sales tax exemption.
Some Highlights of the Energy Excise Tax
· The local energy excise tax can be levied by county ordinance. It is not subject to a referendum.
· Initially, the rate of the excise tax phases in over the same 4 year period as the sales and use tax phases out.
· Following phase in, the excise tax caps at 2%. If your county has any combination of LOST, SPLOST, HOST or MARTA, you get a 2% energy tax. If you have only one of them your energy tax rate is only 1%. The only exception to this will be Atlanta where it is capped at 3% due to the municipal option water and sewer tax.
· This is essentially a county tax. There must be a meet and confer with the cities. If a city declines to participate, it will be collected countywide but the city gets no proceeds. If cities choose to participate, they will get a share based upon the same split they get through the two underlying local sales & use taxes.
· If cities participate, an intergovernmental agreement is required.
· While it can still be levied at a later date, counties that wish to ensure that county tax revenues lost due to the energy sales tax exemption are replaced have until December 31, 2012 to levy the local energy excise tax.
Please keep in mind, there is no requirement that counties impose this excise tax. It is purely an option that has been made available to replace local sales and use tax proceeds that will be otherwise be lost due to the energy sales tax exemption.
Excise Tax ACH Form Gas South: This is Gas South's form that should accompany the county's ordinance when sent to Gas South.
Excise Tax Jurisdiction Form: This is Georgia Power's form that should accompany the county's ordinance when sent to Georgia Power.
General Excise Tax ACH Form: This is the generic ACH form that should accompany the county's ordinance when being sent to all other energy providers.
Dept. of Ag Rules and Regs: Copy of Rules and Regulations regarding the energy exemption on energy used in Ag production.
Please contact Clint Mueller at ACCG if you have any questions.