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Tax Exemption for Local Manufacturers to Cut City Revenue

Oct 08, 2012 -- 9:25pm

 

By: Laura-Jane Hatcher (WRGA News) 
 
A new tax exemption for Rome manufacturing companies could shrink precious revenue for the local government.  
 
The impact of House Bill 386 was discussed at the Rome City Commission meeting Monday night. The legislation, which was passed in March just 30 hours after its introduction to the Georgia State House, includes a tax exemption on energy used in manufacturing. Prior to this, there was an exemption to electricity sold to manufactures, allowing the companies to bypass sales tax. With the implementation of this new law, all energy necessary and integral to the manufacturing process is now exempt from sales tax. 
 
Even though Rome has a 7% sales tax, not all of that revenue is potentially lost from our local government, said Mayor Evie McNiece. 
 
“House Bill 386 is exempting 6% of that tax. 4% of it belongs to the state. 3% belongs locally, but the educational portion of it is not in effect,” McNiece said. “The local option sales tax and SPLOST-- that 2% is what's in question locally. That’s what we’re trying to determine--what the impact will be on the city if that revenue is not available.” 
 
The city does have some ability to manage or not pursue this exemption. Commissioners are unsure of how much money could be lost if they chose to allow the full 2% immunity, but Finance Committee Chairman and city commissioner Jamie Doss estimates it to be hundreds of thousands of dollars.  
 
 
The exemption will be phased in over the next four years, beginning January 1st. With upwards of 150 manufacturing companies in the Rome area, the city commission is studying the issue with a keen eye.
 
 

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