Saying that Georgia has lost more than $1 billion in manufacturing jobs and investment to other states because of high energy costs, state utility regulators have asked lawmakers to repeal a "burdensome" tax that manufacturers pay on energy sales.
But the idea, which has gone before state lawmakers before, could cost Georgia tens of millions of dollars in tax revenue, state auditors say.
Georgia is one of 10 states where manufacturers pay a sales tax on energy. The state portion is 4 percent. Local tax amounts vary. In a letter to Georgia lawmakers, the Public Service Commission says the higher costs are leading manufacturing companies to expand in other states instead of here.
"Georgia remains non-competitive with its neighboring states, and nearly all states, by taxing energy used in manufacturing," the letter said.
PSC Chairman Stan Wise said Georgia companies are at a disadvantage because their energy costs are 5 percent or 6 percent higher than those in other states.
"If there ever was a time to take a sales tax off of a commodity, this would be it," Wise said.
Energy costs -- such as electricity and gas -- are the second-highest costs that Georgia manufacturers pay, said Roy Bowen, president of the Georgia Association of Manufacturers. Bowen said this has led to companies expanding in other states instead of in Georgia.
"Georgia is losing investment dollars and job opportunities," he said.
Georgia lawmakers have entertained cutting the sales tax on energy several times. The idea also was part of sweeping proposals made by a special council of economists and business people charged with reworking the state's tax system. Some tax breaks passed, but the massive overhaul that included doing away with the sales tax on energy, failed in the past legislative session.
State auditors at the time factored in the use of several energy sources, including coal, natural gas, gasoline and other petroleum products.
They estimated that eliminating the tax could cost the state $137.2 million in tax revenue in fiscal 2013.
"Eliminating the sales tax on energy for manufacturing enjoyed wide support among House leadership and was a key element of the tax reform proposal that was under consideration by the legislature this past session. Tax reform will again be at the forefront in the upcoming session, and in turn, so will this proposal," a spokesman for House Speaker David Ralston said.
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