Georgia standing alone in taxing energy for manufacturers

By Sen. Tim Golden

November 19, 2007 -- Valdosta, GA -- As the price of oil continues to climb dangerously closer to the magic number of $100 per barrel, and the price at the gas pump has once again exceeded the $3 mark, more and more state governments are taking action to soften the impact on the manufacturing economy.

Why isn’t Georgia one of those states?

Earlier this year, the North Carolina General Assembly overwhelmingly passed legislation that would phase out the energy sales tax for manufacturing and agricultural businesses in that state.

More recently, Tennessee and Missouri have followed suit. Meanwhile, Arkansas has acted to reduce its energy sales tax on manufacturers by one third. And the newly elected governor of Louisiana is planning to do away with that state’s energy sales tax, already reduced to 3.3 percent.

So that leaves Georgia standing alone in the Southeast and in smaller company nationwide on the outdated and unfair sales tax on energy used in manufacturing. Only in our state is the manufacturing industry denied any relief whatsoever when energy costs go through periodic spikes to historically high levels.

In signing the tax relief measure for his state into law, Missouri’s governor said, “Manufacturing is a vital part of our diverse economy, and this will help level the playing field for Missouri manufacturers.” Unfortunately, it makes the field that much more out of balance against Georgia manufacturers.

Despite the fact that Georgia has lost more than 130,000 manufacturing jobs in recent years, the economic disadvantage caused by the energy sales tax is lost on some of our state leaders.

As I have reported before, both the Senate and House of Representatives approved some relief in the form of a cap on the energy sales tax during the past legislative session. To the dismay of most legislators and all Georgia businesses, the governor vetoed that tax relief.

Those of us from both sides of the political aisle who worked so hard to pass that measure know it would have protected manufacturers against tax increases caused by spikes in energy costs. The less money a company spends on operating costs, the more it can reinvest to either expand or improve its operations, reducing the likelihood of further job losses.

Because of market conditions, global competition and many other factors in many industries, it is already challenging enough for Georgia manufacturers to expand or even maintain their employment numbers. For example, the Valdosta area was just recently hit with 151 jobs being eliminated at Weyerhaeuser’s iLevel Veneeer Technologies facility.

Why would the state of Georgia want to continue imposing the extra penalty of a full sales tax on such a volatile commodity as energy costs? The state government does not need such an economic windfall when the cost is hundreds and thousands of jobs leaving or not coming into our state.

When the legislature goes back into session in January, many of my colleagues and I will resume our work to eliminate, reduce or cap the energy sales tax on manufacturers as soon as possible. Hopefully, everyone in state government will come to realize that the revenues from that tax won’t be as lucrative if we continue to drive away existing and prospective employers in the process.

• Sen. Tim Golden (D-Valdosta) represents Georgia Senate District 8 and is Chairman of the Senate Democratic Caucus.