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Perdue: State gas tax won’t jump

POSTED: June 13, 2008 5:01 a.m.
Gov. Sonny Perdue on Monday halted what would have been a 2.9 cent per gallon jump in the state gasoline tax, saying the state should not be taking advantage of a tax windfall driven by spiking prices at the pump.

"Frankly, I don’t think we can justify raising taxes on gasoline in a time of economic stress for many families," Perdue said at a state Capitol news conference.

In addition to regular gasoline, Perdue’s executive order freezes the state tax on diesel fuel that had been slated to rise 4.2 cents a gallon to 16.5 cents and aviation fuel that would have jumped 3.6 cents a gallon to 20.9 cents.

Under a 2004 law, the state was scheduled to post a higher tax on Monday that would have taken effect on July 1. The sales tax on fuel is adjusted twice a year based on the average price of gas.

When that average price rises — as it has in recent months — the tax goes up as well.

In Georgia, the price of every gallon of gasoline includes 37.4 cents in state and federal taxes and a local tax that varies from county to county. In addition, there is a one-half cent per gallon fee for underground storage tanks.

For users of diesel fuel, the tab is even higher.

The pump price includes 24.4 cents in federal taxes, 7.5 cents in motor fuel tax, 12.3 cents in sales taxes and the half-cent levy for storage tanks for a total of 44.7 cents per gallon.

For distributors, like Don Smallwood of Gainesville-based D-Jay Petroleum, the news is mixed. Smallwood said his customers who offer gasoline at retail are struggling, selling fuel at the price they pay for the product.

He said the retailers who operate convenience stores are hoping the customer will come inside and buy coffee, soft drinks or snacks, which have a profit margin.

But Smallwood said retailers are trying to compete with their neighbors and fight a difficult battle for a penny or two.

"Our cost for a truckload of gasoline is so much more than it was even a few months ago," Smallwood said, adding that payment schedules at every step in the process must be met and that some retailers are facing challenges.

John Cape of Olympic Oil, which operates 11 PetroFast convenience stores in the Gainesville area and provides gasoline to 35 others, said $4 a gallon gasoline does not leave much spare cash for extras.

"We’re hoping they’ll come in," Cape said.

Both Cape and Smallwood said the margin is no better for distributors, who also must purchase higher priced diesel fuel for trucks to deliver the product to stations.

Halting the increase will mean a loss of $70 to $80 million in revenue for the state, Perdue said. Revenue from the motor fuel tax funds transportation and road projects.

Last month, Perdue suspended the state tax for off-road diesel used by farmers, miners, construction workers and timber companies. At the time, he said that he couldn’t provide the same relief for all drivers because the state needed the revenue for transportation projects.

Perdue grabbed headlines in 2005, when he suspended the state sales tax on gasoline for a month as prices soared in the wake of Hurricane Katrina.

Currently, gas in Georgia is averaging $3.95 a gallon, according to AAA Daily Fuel Gauge Report. That’s slightly below the national average of $3.98 per gallon.

The freeze Perdue announced on Monday will remain in place until January when the state legislature returns.

House Democratic Deputy Whip Rob Teilhet of Smyrna said Georgia Democrats have been calling for gas tax relief since the middle of May.

Teilhet said the failure of the state’s ruling Republicans to move forward with a transportation plan has made high gas prices even worse on Georgians by leaving them stuck in traffic.

But that transportation plan would have paid for long-term projects to ease congestion, and it would likely take years for drivers to benefit.

The Associated Press contributed to this report



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