published Saturday, June 25th, 2011

Georgia freezes tax on gasoline

ATLANTA — Gov. Nathan Deal has frozen Georgia’s gas tax, preventing an increase that would have kicked in July 1.

Deal signed an executive order freezing the gas tax at current levels. Aides say that will save motorists an estimated $40 million in taxes.

The state gas tax had been set to rise 1.6 cents a gallon next week, as a result of a formula tied to fuel prices. Deal signed the order Thursday.

Deal had declined to step in and freeze the state sales tax when it rose by nearly 3 cents a gallon on May 1.

Spokesman Brian Robinson said Friday the Republican governor decided to act this time because the state sales tax would be rising even as the price of gas is falling and Georgians had already been hit with an increase in May. The tax would rise because it is based on average gas prices over six months.

The average gas price in Georgia is $3.52 a gallon, below the $3.60 a gallon national average, according to the AAA Daily Fuel Gauge Report.

Georgia’s gas taxes are made up of several parts. The first is a charge of 7.5 cents per gallon that doesn’t change. The second is a more volatile per-gallon charge that can go up or down as the gas price varies.

The executive order Deal signed on Thursday means that rate will remain at 12.9 cents a gallon rather than rising to 14.5 cent a gallon.

Many Georgia counties impose a third additional fee that’s also pegged to gas prices.

A majority of the revenue from the gas levy goes to transportation projects. Of the $40 million in lost revenue, $30 million would have gone to transportation and $10 million to the general fund, according to state Department of Transportation spokesman David Spear.

But Spear said the department budgets to account for fluctuations in the gas tax so it is unlikely it will need to adjust spending.

The move to steady the gas tax in Georgia comes as President Barack Obama said the United States will release 30 million barrels of oil from the country’s emergency reserves in response to turmoil in the Middle East and North Africa, particularly Libya.

That could drive prices down in Georgia and elsewhere.

A mechanism in Georgia’s gas tax formula prompts the gas tax to be recalculated if there are wide swings in price. The release of oil from the reserve could drive prices down so far the state might need to recalculate again.

Robinson said the governor’s action must be ratified by state lawmakers either when they return for a special session in August or during their regular session in January.

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