CALHOUN, Ga. - Some Georgia leaders, including the mayor and a state representative from Dalton, say manufacturers need a jolt of economic energy and that eliminating the tax on electricity could do the job.
State Rep. Roger Williams, R-Dalton, will introduce a bill early this week to scrap the tax on energy for manufacturers.
Though eliminating the tax could cost the state about $420 million annually, at a time when legislators are trying to trim $1 billion from next year's budget, Williams said it's necessary if Georgia is to compete for businesses with neighboring states.
"We're concerned about keeping business here in Georgia," Williams said. "It could cost about $420 million yearly, and that might be tough to do with our budget right now."
Tennessee, South Carolina and Alabama all forgo the tax revenue to attract big industry, and that makes Georgia vulnerable to losing it, Williams said.
On Thursday, Dalton Mayor David Pennington urged fellow members of the Northwest Georgia Regional Commission to lobby their legislators to pass the bill.
"That's the biggest economic development thing we can do for this region in 2011," he said. "All of us have a big stake in this."
But because removing the tax would hurt sluggish state finances, Williams will propose a gradual drawdown in the tax.
The bill is written so the reduction will take place in annual increments over five years, according to Williams.
"There seems to be some debate over whether we can take the hit all at once," the veteran lawmaker said. "We may be able to do better than that."
Some members of the regional commission questioned Pennington about how the state would make up the funds.
The mayor said the loss of more manufacturing jobs would mean a drop in income tax, property tax and sales tax revenue when the workers become unemployed.
The bill seems to have some support from high-voltage leaders around the state. Gov. Nathan Deal, as a candidate, said he was in favor of eliminating the tax.
"We're in the bottom half of states in terms of a tax law [favorability to business]," Deal said while on a campaign stop in Dalton in July. "We can compete [with other nations] with technological industries, but technology and manufacturing equipment requires energy consumption. I believe it's important we consider removing the sales tax on energy consumption for manufacturing purposes."
Pennington said that all manufacturers would benefit, but the carpet industry in particular would. He said he had talked to managers at one medium-sized manufacturing operation in Dalton who said the plant paid $400,000 a year in energy taxes.
Carpetmakers are shifting from spun yarn to bulk continuous filament production techniques and, while the new processes save money, they also use more electricity. Carpet producers have closed older plants across the region, but leaders are concerned they may locate elsewhere because of the tax.
"It's critical for us to get this done this time," Pennington said.