Deal halts planned increase in state gas tax

Every six months the Department of Revenue analyzes the previous half year's gas price and adjusts the state tax up or down.

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 percent to 4 percent, depending on the area. The fluctuating state rate is one that was soon to change.

Deal said that while the state's economy and unemployment rate have improved, taking extra money from taxpayers now is the wrong move.

“We’re seeing a slow and steady rebound in Georgia’s economy, with our unemployment rate going down and state revenues heading up, but Georgians are still paying gas prices that are high by historical standards," Deal said in a statement. "The state should not add to that burden at this juncture.”

But not everyone believes it was a wise move. Alan Essig, executive director of the Georgia Budget and Policy Institute, said the move does not make "budgetary or economic sense."

"Having that kind of cut to transportation funding seems problematic," said Essig, a former state tax analyst. "The idea that consumers are going to see the positive impact is questionable."

Deal's move will maintain the current tax rate through the end of the year. 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.

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. Deal, too, blocked an increase in June 2011.

Through the first 11 months of the current fiscal year, the state has brought in $523.4 million from the gas tax, compared with $428.3 million over the same period a year ago.

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