Don’t blame the Middle East. The price hike you’ll see today at the pump — anywhere from 4.1 to 5.6 cents a gallon across metro Atlanta — is a result of Georgia’s tax rate structure.
The state levies a tax on gas, and cities and counties take their own bites, of differing sizes, on top of that.
Drivers who fill up in Atlanta will see the biggest boost: A driver buying 20 gallons of fuel will pay $1.12 more than last week. In Fayette County, which has a lower local tax rate, filling up with 20 gallons will cost 82 cents more than it did last week.
It’s small change, but for some Georgians already stressed with rising costs in other areas, including food, it adds up.
“It doesn’t make much difference ... [but it] still is depressing when you can’t afford anything due to no jobs and a dwindling economy,” said Mary Ritch, 25.
So exactly what happened?
In normal times, the number of cents-per-gallon you pay in state and local gas taxes is calculated at six-month intervals, based on the price of gas at that time, and does not change in between.
Let’s say it’s set at 10 cents a gallon on Jan. 1. For the next six months, if the price of gas is $2.50, you pay 10 cents a gallon in state and local taxes. If the price of gas is $4, you pay 10 cents a gallon in state and local taxes.
There is one exception: If the price of gas goes up or down by more than 25 percent within that six-month period, state and local gas taxes automatically are recalculated to reflect the new price. That’s why we’re seeing a tax increase in May, rather than waiting until July, when the amount would normally be reset.
“What the [Georgia Department of Revenue] is trying to do is keep the sales tax relevant to what the actual prices are that are out there,” explained Phil Embry, the former director of GDOR’s sales tax and motor fuels department. He’s now the tax consultant for the Georgia Oilmen’s Association.
In previous years, governors have placed freezes on motor fuel tax increases. Gov. Sonny Perdue froze what would have been a 2.9-cents-per-gallon increase in 2008 and held the tax steady for a brief period in 2005 following Hurricane Katrina.
Gov. Nathan Deal indicated he will not halt the current increase. It will be supplanted in any case by the next regular recalibration, just two months from now.
“The governor of Georgia has the power to suspend the collection of taxes, but the liability for the tax is still there unless the General Assembly retroactively ratifies the governor’s actions,” Deal spokesman Brian Robinson said Friday. “If the Legislature didn’t act, we’d have a serious quandary because the tax would come due and the distributors would have not have prepared for it.”
The state’s motor fuel tax is composed of three parts: a flat 7.5-cents-per-gallon excise tax; a fluctuating 4 percent prepaid state tax rate; and a local tax rate that ranges from 2 to 4 percent, depending on the area. Those fluctuating state and local taxes are the ones that change today.
The state portion was set in January at 10.1 cents per gallon, calculated on an average retail gas price of $2.53 per gallon. The new rate, 12.9 cents per gallon, is based on a per-gallon rate of $3.22 per gallon, according to GDOR. The local portion rounds out the rest of the increase.
The majority of the state’s sales tax goes to the Georgia Department of Transportation, with a portion going to the state’s general fund, Embry said. Local taxes help pay for local roads and schools, among other things.
Historically, Georgia has had lower gasoline taxes than other states. According to a January 2011 report by the American Petroleum Institute, Georgia ranked 37th among states.
Martin Fisher of Woodstock has no problem paying a little bit more at the pump. While he’s had to cut back on some expenses in order to pay for increasing costs of fuel over the past few months, he believes the sales tax increase will benefit state and local projects.
“This hike is going to cost me about $1.20 a week, less than the cost of a cup of coffee from Dunkin’ Donuts or Starbucks,” said Fisher, a director of information security for an Atlanta health care system. “Gas taxes fund roads and bridges that the people who buy gas need, right?”
And as for whom to blame, since the tax is adjusted based on the price of gas, maybe it’s the Middle East’s fault, after all.
The Associated Press contributed to this article.
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