Georgia to Increase Gas Tax Through Conversion to Excise Tax

The Peach State's gasoline excise tax is among the lowest in the nation—only 7.5 cents per gallon, but with a four percent state retail sales tax on fuel, based on January gas prices, as well as local sales taxes of up to four percent, another 19.03 cents is added to the gas tax, according to the American Petroleum Institute as of Jan. 1 [PDF], resulting in a 26.53-cents per gallon state and local gas tax.

New legislation will result in an excise tax of 26 cents per gallon by conversion of the state sales tax on gas and place limits on local sales taxes on fuel, so the fuel tax may increase due to the local sales taxes on fuel that remains untouched.

According to Mike Miller of WJBF (ABC news), "the total gas tax would go up to about 53 cents a gallon," but that includes the federal 18.4 cents federal gas tax. Subtract the federal tax, and you get 34.6 cents per gallon, an increase of eight cents based on Jan. 01 prices.

However, the excise tax will not be stagnant, but fluctuate with changes in fuel efficiency and the Consumer Price Index. According to HB 170 [PDF]:

The excise tax rate shall be multiplied by the percentage increase or decrease in fuel efficiency from the previous year, and the resulting increase or decrease shall be added to the excise tax rate to determine the preliminary excise tax rate.

Once the preliminary excise tax rate is established, it shall be multiplied by the annual percentage of increase or decrease in the Consumer Price Index. 

Gov. Deal writes "that our gas tax has stayed the same since the early 1970s." Keith Laing of The Hill writes that the new gas tax and fees go into effect on July 1.

Additional fees included in the legislation according to Miller include:

• A $200 fee on electric vehicles.
• A $5 per night hotel and motel fee [similar to a transient occupancy tax].
• A fee [based on weight] on heavy trucks that is between $50 and $100 dollars a year.

Clearly there is a pattern emerging—Georgia is hardly alone among red states to be raising its gas tax or adding new fees to increase sorely needed transportation funds, the topic of an insightful piece by Russell Berman, associate editor at The Atlantic.

Why are Republican governors and legislatures increasing their gas taxes when Republican (as well as many Democrat) congress members are so reluctant to even mention the "T" word?

In short, "Republican [state] legislatures that actually have to balance their budgets are finding increases indispensable," writes Berman.

When Gov. Nathan Deal signs the bill, as he indicated he would, Georgia will join Utah and South Dakota (states with Republican state government trifectas—thank you, Ballotpedia) and Iowa (which has a split legislature but a Republican governor) in passing and signing gas tax increase legislation this year.

Hat tip to AASHTO Daily Transportation Update.