Should Commerce institute a two-percent “excise tax” on energy used in manufacturing to offset a state waiver of sales taxes on that energy?
Meeting Monday night, the council took no action on the issue after city attorney John Stell briefed the council on the effects of the new law passed last year.
Essentially, the law eliminates the collection of sales tax on the energy used to create goods, meaning that Commerce and all other Jackson County governments will no longer collect the local option sales tax and the special purpose local option sales taxes on such energy from manufacturers who qualify for the exemption.
When it approved the legislation, the General Assembly gave local governments the option of levying a two-percent excise tax on the same energy to recover lost revenue.
The council opted to take no action at present, mainly because no one has a good idea yet as to how the tax abatement will affect city revenue or what implementation of an excise tax might have in terms of discouraging new businesses from locating in the area.
“It’s a matter of weighing your revenue stream versus the potential (losses in) economic development,” Stell advised.
The legislation calls for a four-year phase-out of the sales tax for manufacturers who apply for and qualify for the exemption. Finance director James Wascher told the council that he knows of only two local industries who have applied for the exemption.
Getting good data is challenging. Currently, all sales taxes are divided among the local governments, which means that an industry in Braselton that gets the exemption will have an effect on the amount of SPLOST, LOST and E-LOST revenue flowing to the city and the city school system.
Jackson County has not decided whether to invoke an excise tax, according to Stell. If Commerce levies the tax and Jackson County does not, the city would get the entire two-percent from participating Commerce manufacturers. If Jackson County implements the tax, its action trumps that of the city, and the tax — from all qualifying industries in the county — would be divided among the various county jurisdictions, Stell indicated.
Also at issue is whether implementing the excise tax would put Commerce — or Jackson County — at a competitive disadvantage in attracting new industry.
“I don’t want to see us lose any revenue we don’t have to,” said mayor pro tem Keith Burchett, “but I don’t want to see us shoot ourselves in the foot either.”
“Should we wait until we get more data?” questioned councilman Johnny Eubanks.