Officials say business tax break crucial to local economy

Most North Georgia cities and counties exempt manufacturers from paying taxes on certain inventories, and those that don't already are playing catch-up.

It's up to individual cities and counties in the state to approve exemptions -- known as Freeport Exemptions -- on manufacturing and warehouse inventories. More than 60 percent of cities and counties have adopted Freeport Exemptions at some level, according to the Georgia Department of Revenue Web site.

Whitfield County's Freeport Exemptions go into effect at the first of the year. The exemption starts at 20 percent in the first year and plans are to increase it by that much annually until it hits 100 percent, said Commission Chairman Mike Babb.

"We will now have the opportunity to be looked at by more companies that normally would have bypassed us because other counties offered them the Freeport Exemption," he said.

On Nov. 3, Chatsworth voters approved the three classes of Freeport Exemptions. The city's initial 20 percent exemption starts in January 2011, said Mayor Tyson Haynes.

"We were actually, in North Georgia, about the only entity that didn't have (the Freeport Exemption)," said Mr. Haynes. "We felt like we wanted to get on an even playing field with the rest of our area."

Murray County is one of the few counties that does not yet offer the exemptions, but County Commissioner David Ridley said he hopes to put the issue before voters in the November 2010 elections.

Dinah Rowe, president of the Chatsworth-Murray County Chamber of Commerce, said the exemptions are tools both to attract new businesses and keep the old.

"A lot of (the) time, new industry gets incentives and existing industry maybe doesn't," she said. "This was something we could do for our existing industry."

Ms. Rowe said officials don't think property taxes will need to go up to offset revenue lost because of the exemptions.

Instead, she said, "we had the chance of losing industry to go to Freeport counties and then property tax would have had to go up to cover those industries."

Whitfield County Personal Property Director Jennifer Jones said it's hard to pinpoint how much the exemptions will affect revenues, but about 200 Whitfield businesses such as area carpet producers will probably qualify.

Whitfield County Finance Director Ron Hale said the county expects to receive about $400,000 less in taxes in Freeport Exemption's first year, but that number could grow to about $2 million when exemptions reach 100 percent. City government and schools will likewise see lowered revenues, he said.

The hope is that, over time, the increase in business will make up for what is lost with the exemptions, he said.

Chattooga County Commissioner Jason Winters said his county, which put the exemptions in place this year, is so far finding that to be true.

With Chattooga's 20 percent Freeport Exemptions, companies are housing more inventories in the county and thereby increasing the tax base.

Don Henderson, vice president and general manager at the Trion location of Mount Vernon Mills, a denim manufacturer, said that without Freeport, local businesses are at a disadvantage compared to businesses in counties with the exemptions and to businesses in other states that don't tax warehouse inventory.

"The better we can price our fabric, the better opportunities we have for getting those orders and getting those orders (is) critical to being able to run our plants and give people full work schedules," said Mr. Henderson.

PDF: Application for Freeport Exemption Inventory

FREEPORT EXEMPTIONS

Class 1: Raw materials and goods in process of manufacture

Class 2: Finished goods in the hands of the manufacturer; held less than 12 months

Class 3: Finished goods in the hands of a distributor; held less than 12 months and destined for out-of-state shipment

Source: Georgia Department of Revenue, Georgia Code

NORTH GEORGIA FREEPORT EXEMPTIONS

Bartow: 80 percent on all classes

Cartersville: 20 percent on all classes

Adairsville: 80 percent on all classes

Catoosa: 100 percent on all classes

Fort Oglethorpe: 40 percent on all classes

Ringgold: 100 percent on all classes

Chattooga: 20 percent on all classes (includes municipalities), 40 percent effective Jan. 1, 2010

Dade: 100 percent on all classes

Trenton: 100 percent on all classes

Gordon: 40 percent on Class 3 only

Calhoun: 20 percent on all classes

Murray: No exemption at county level

Chatsworth: 20 percent on all classes effective Jan. 1, 2011

Walker: 100 percent on all classes

LaFayette: 100 percent on all classes

Rossville: 100 percent on all classes

Whitfield: 20 percent on all classes effective Jan. 1, 2010

Dalton: 20 percent on all classes effective Jan. 1, 2010

Sources: Georgia Department of Revenue, county officials if available