Un­der­stand­ing Gas fees can be tax­ing

The Covington News - - Opinion - Jim Tu­dor Colum­nist Jim Tu­dor lives in New­born. He can be reached at jtu­dor@aol.com.

A lot of press, in­clud­ing this pub­li­ca­tion, has been ded­i­cated to try­ing to fig­ure out why gas prices, al­ready high, are headed fur­ther up­ward due to an in­crease in state and lo­cal sales taxes, ef­fec­tive Sun­day.

Some have called for Gov. Deal to can­cel the in­crease (which he can’t) or leg­is­la­tors to change the law (which they can). Ge­or­gia has a com­pli­cated man­ner of tax­ing mo­tor fuel and it will re­quire leg­is­la­tion to change things. Some “ myths” need fur­ther ex­pla­na­tion:

Myth 1: “Ge­or­gia Has One of the Low­est Gas Taxes in the Nation”.

You hear this of­ten from pro­po­nents of ad­di­tional money for trans­porta­tion. Such claims are based on Ge­or­gia’s ex­cise tax on gaso­line, a flat 7.5 cents per gal­lon that is one of the low­est such taxes na­tion­ally.

But such claims do not take into ac­count that Ge­or­gia is one of the few states that charge state and lo­cal taxes on mo­tor fuel. This “hid­den” gas tax goes to state, and lo­cal gov­ern­ments and to­gether they add more than 20 cents per gal­lon to what you pay. In ad­di­tion, be­cause they are sales taxes based on sell­ing price, they in­crease as fuel prices in­crease, a dou­ble whammy for driv­ers.

On May 1, the price you pay for gaso­line will in­crease 2.8 cents per gal­lon for the state tax and 2.1 cents per gal­lon for res­i­dents of New­ton County (based on 3 per­cent lo­cal tax rate), adding nearly 5 cents per gal­lon to sell­ing prices.

These taxes are pre-col­lected at whole­sale and are in­cluded in the pump price. Be­cause taxes are pre­paid, the state ad­justs the av­er­age sell­ing price for which the tax is to be fig­ured and col­lected.

The price ad­just­ment is usu­ally made twice a year, but there is a trig­ger clause that re­quires an ad­di­tional ad­just­ment when prices in­crease or de­crease more than 25 per­cent since that last ad­just­ment.

Ac­cord­ing to the Amer- ican Pe­tro­leum In­sti­tute the to­tal fed­eral, state, and lo­cal taxes paid by Ge­or­gians was 39.2 cents per gal­lon, as of Jan. 1. This will in­crease to ap­prox­i­mately 44.1 cents per gal­lon on May 1.

By com­par­i­son, the na­tional av­er­age is 48 cents per gal­lon. Taxes in our neigh­bor­ing states are as fol­lows: South Carolina, 35.2 cents; Alabama, 39.3 cents; Ten­nessee, 39.8 cents; North Carolina, 51.2 cents; and Florida, 52.8 cents. As you can see, with both taxes Ge­or­gia’s tax is rapidly ap­proach­ing the na­tional av­er­age and mo­torists will save 9 cents per gal­lon by stop­ping in South Carolina.

Myth 2: “We Used to Have Some of the Low­est Gas Prices — What Hap­pened?”

Just as high prices push sales taxes on gas higher, low prices do the op­po­site. Re­mem­ber when ev­ery­one used to say “fill up be­fore you leave Ge­or­gia”? When gas prices were $2 or less, the lower sales tax re­duced prices by at least 10 cents per gal­lon, com­pared with other states. Now that the Mideast re­mains in tur­moil, these higher prices ap­pear to be here for a while and Ge­or­gia’s sys­tem of adding sales taxes based on sell­ing price will add pain at the pump.

Myth 3: “Credit Card Points Are Free”

How many of us carry plas­tic that re­wards us with miles/ points, etc? What many of you may not re­al­ize is that re­tail­ers pay 2-3 per­cent of the sell­ing price to the credit card com­pa­nies when plas­tic is used. This adds about 8-10 cents per gal­lon to cost at to­day’s re­tails.

Many mer­chants once charged one price for a cash pur­chase and an­other price for a credit pur­chase. Ex­pect to see such two-tier pric­ing re­turn as mer­chants seek to of­fer in­cen­tives to cus­tomers to pay with cash.

It’s more un­wieldy, but would it be worth a nickel a gal­lon?

For more on how Ge­or­gia stacks up against other states, gas tax wise, be sure to visit the API web­site at http:// www. api. org/ sta­tis­tics/ fu­eltaxes/ up­load/ Gaso­line-TaxMap.pdf

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