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County alerted to loss of excise tax

Will schedule meeting with city

POSTED: August 30, 2012 12:30 p.m.
 

A tax on manufacturing businesses is up for discussion among Forsyth County and city of Cumming officials.

State legislators passed a law earlier this year that would start a four-year phase out to exempt the sales tax on energy charged to manufacturing businesses.

The provision was part of larger changes to the tax code and was meant to make the state more attractive to manufacturers.

Along with the state portion of the tax, the law eliminated the two 1 percent sales taxes local governments collect as part of the local option sales tax, which reduces reliance on property taxes, and the special purpose local option sales tax, which funds special voter-approved projects.

It does not impact education SPLOST revenues.

The legislation also included a provision to allow counties and cities to “reinstitute” the local portion of the tax, Forsyth County Attorney Ken Jarrard said.

“So what the state’s taken away as far as taxes, the board of commissioners, with the municipalities, have the ability to reintroduce,” Jarrard said. “It’s like a seamless handoff. Now we don’t have to, but we can.”

The first step toward keeping the energy tax locally, he said, is to send written notice to the city of a scheduled meeting to discuss the issue.

County commissioners voted 5-0 on Tuesday to inform the city prior to the Saturday notification deadline of the planned meeting.

Jarrard said the county and city could still opt out of the process to levy the excise tax later.

In terms of the loss to the local sales tax revenue, Jarrard said those figures are unknown, as the state department of revenue doesn’t track that data.

Forsyth County Finance Director David Gruen said it could “easily exceed $100,000 in our taxes.”

Without more information, the commission decided to initiate the process to review the tax.

“We need to keep our options open until we find out,” Commissioner Brian Tam said.

The letter allows the governments to adopt a local ordinance to levy the excise tax later, Jarrard said, but it doesn’t obligate them to do so.

To keep sales tax revenues steady from 2012 to 2013, the commission would need to adopt the excise tax before the end of this year.

Officials in neighboring Hall County have decided to implement the local tax to recoup revenue, but haven’t been able to determine how much needs to be levied and when.

The effect on the state’s revenue, according to a fiscal note connected to the bill, is supposed to total $167.4 million.

Officials from Gainesville say that, according to “unofficial and preliminary” numbers they were given by Georgia Power, their city will lose about $400,000 a year.

“The bottom line is ‘what’s it worth?’ and I don’t think anybody knows the answer to that,” Hall County Attorney Bill Blalock said as he discussed the agreement with local leaders.

The money collected for the excise tax, though it would replace some SPLOST revenues that are meant for specific projects, will be unrestricted, meaning local government officials can spend it on any part of government operations.

Ashley Fielding of the FCN regional staff contributed to this report.

 

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